Correlation Between Sumitomo Mitsui and NIKE
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and NIKE 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 NIKE 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 NIKE Inc, you can compare the effects of market volatilities on Sumitomo Mitsui and NIKE 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 NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and NIKE.
Diversification Opportunities for Sumitomo Mitsui and NIKE
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sumitomo and NIKE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc 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 NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and NIKE go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and NIKE
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.17 times more return on investment than NIKE. However, Sumitomo Mitsui is 1.17 times more volatile than NIKE Inc. It trades about 0.13 of its potential returns per unit of risk. NIKE Inc is currently generating about -0.01 per unit of risk. If you would invest 5,749 in Sumitomo Mitsui Financial on December 7, 2024 and sell it today you would earn a total of 3,188 from holding Sumitomo Mitsui Financial or generate 55.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.54% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. NIKE Inc
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| NIKE Inc |
Sumitomo Mitsui and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and NIKE
The main advantage of trading using opposite Sumitomo Mitsui and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.| Sumitomo Mitsui vs. DENTSPLY SIRONA | Sumitomo Mitsui vs. Chunghwa Telecom Co, | Sumitomo Mitsui vs. Telecomunicaes Brasileiras SA | Sumitomo Mitsui vs. Iron Mountain Incorporated |
| NIKE vs. Clave Indices De | NIKE vs. Fica Empreendimentos Imobiliarios | NIKE vs. Magazine Luiza SA | NIKE vs. AutoZone, |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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