Correlation Between Sumitomo Mitsui and Plano Plano
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Plano Plano 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 Plano Plano 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 Plano Plano Desenvolvimento, you can compare the effects of market volatilities on Sumitomo Mitsui and Plano Plano 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 Plano Plano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Plano Plano.
Diversification Opportunities for Sumitomo Mitsui and Plano Plano
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sumitomo and Plano is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol 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 Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Plano Plano go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Plano Plano
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 1.11 times more return on investment than Plano Plano. However, Sumitomo Mitsui is 1.11 times more volatile than Plano Plano Desenvolvimento. It trades about 0.53 of its potential returns per unit of risk. Plano Plano Desenvolvimento is currently generating about -0.06 per unit of risk. If you would invest 7,065 in Sumitomo Mitsui Financial on August 27, 2024 and sell it today you would earn a total of 1,363 from holding Sumitomo Mitsui Financial or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Plano Plano Desenvolvimento
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Plano Plano Desenvol |
Sumitomo Mitsui and Plano Plano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Plano Plano
The main advantage of trading using opposite Sumitomo Mitsui and Plano Plano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Plano Plano 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 Plano Plano will offset losses from the drop in Plano Plano'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 |
| Plano Plano vs. MAHLE Metal Leve | Plano Plano vs. Telecomunicaes Brasileiras SA | Plano Plano vs. Tyson Foods | Plano Plano vs. Bread Financial Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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