Correlation Between Sumitomo Mitsui and Ford
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Ford at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sumitomo Mitsui and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and Ford Motor, you can compare the effects of market volatilities on Sumitomo Mitsui and Ford and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sumitomo Mitsui with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Ford.
Diversification Opportunities for Sumitomo Mitsui and Ford
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Ford is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Sumitomo Mitsui is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sumitomo Mitsui Financial are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Ford go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Ford
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.63 times more return on investment than Ford. However, Sumitomo Mitsui Financial is 1.59 times less risky than Ford. It trades about -0.02 of its potential returns per unit of risk. Ford Motor is currently generating about -0.06 per unit of risk. If you would invest 8,972 in Sumitomo Mitsui Financial on November 4, 2024 and sell it today you would lose (110.00) from holding Sumitomo Mitsui Financial or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Ford Motor
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Ford Motor |
Sumitomo Mitsui and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Ford
The main advantage of trading using opposite Sumitomo Mitsui and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Ford can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ford will offset losses from the drop in Ford's long position.| Sumitomo Mitsui vs. MAHLE Metal Leve | Sumitomo Mitsui vs. Multilaser Industrial SA | Sumitomo Mitsui vs. Tres Tentos Agroindustrial | Sumitomo Mitsui vs. Autohome |
| Ford vs. Palantir Technologies | Ford vs. Live Nation Entertainment, | Ford vs. Guidewire Software, | Ford vs. PENN Entertainment, |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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