Correlation Between Sumitomo Mitsui and Trade Desk
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Trade Desk 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 Trade Desk 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 Trade Desk, you can compare the effects of market volatilities on Sumitomo Mitsui and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Trade Desk.
Diversification Opportunities for Sumitomo Mitsui and Trade Desk
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sumitomo and Trade is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Trade Desk go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Trade Desk
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.81 times more return on investment than Trade Desk. However, Sumitomo Mitsui Financial is 1.24 times less risky than Trade Desk. It trades about 0.14 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.08 per unit of risk. If you would invest 7,364 in Sumitomo Mitsui Financial on October 14, 2024 and sell it today you would earn a total of 1,321 from holding Sumitomo Mitsui Financial or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. The Trade Desk
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Trade Desk |
Sumitomo Mitsui and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Trade Desk
The main advantage of trading using opposite Sumitomo Mitsui and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| Sumitomo Mitsui vs. United Airlines Holdings | Sumitomo Mitsui vs. Broadridge Financial Solutions, | Sumitomo Mitsui vs. ICICI Bank Limited | Sumitomo Mitsui vs. Check Point Software |
| Trade Desk vs. Sumitomo Mitsui Financial | Trade Desk vs. ICICI Bank Limited | Trade Desk vs. Capital One Financial | Trade Desk vs. Broadridge Financial Solutions, |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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