Correlation Between Sumitomo Mitsui and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Procter Gamble 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 Procter Gamble 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 The Procter Gamble, you can compare the effects of market volatilities on Sumitomo Mitsui and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Procter Gamble.
Diversification Opportunities for Sumitomo Mitsui and Procter Gamble
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Procter is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Procter Gamble go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Procter Gamble
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.93 times more return on investment than Procter Gamble. However, Sumitomo Mitsui is 1.93 times more volatile than The Procter Gamble. It trades about 0.09 of its potential returns per unit of risk. The Procter Gamble is currently generating about 0.07 per unit of risk. If you would invest 4,427 in Sumitomo Mitsui Financial on August 27, 2024 and sell it today you would earn a total of 3,837 from holding Sumitomo Mitsui Financial or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.96% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. The Procter Gamble
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Procter Gamble |
Sumitomo Mitsui and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Procter Gamble
The main advantage of trading using opposite Sumitomo Mitsui and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Clave Indices De | Sumitomo Mitsui vs. BTG Pactual Logstica | Sumitomo Mitsui vs. Telefonaktiebolaget LM Ericsson |
| Procter Gamble vs. Verizon Communications | Procter Gamble vs. Micron Technology | Procter Gamble vs. Southwest Airlines Co | Procter Gamble vs. Align Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |