Correlation Between Spotify Technology and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Sumitomo Mitsui 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 Spotify Technology and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Spotify Technology and Sumitomo Mitsui 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 Spotify Technology with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Sumitomo Mitsui.
Diversification Opportunities for Spotify Technology and Sumitomo Mitsui
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spotify and Sumitomo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Spotify Technology i.e., Spotify Technology and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Spotify Technology and Sumitomo Mitsui
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.64 times more return on investment than Sumitomo Mitsui. However, Spotify Technology is 1.64 times more volatile than Sumitomo Mitsui Financial. It trades about 0.17 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.09 per unit of risk. If you would invest 75,530 in Spotify Technology SA on November 28, 2024 and sell it today you would earn a total of 9,470 from holding Spotify Technology SA or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Spotify Technology |
| Sumitomo Mitsui Financial |
Spotify Technology and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Sumitomo Mitsui
The main advantage of trading using opposite Spotify Technology and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Spotify Technology vs. Globus Medical, | Spotify Technology vs. Annaly Capital Management, | Spotify Technology vs. STMicroelectronics NV | Spotify Technology vs. British American Tobacco |
| Sumitomo Mitsui vs. United Natural Foods, | Sumitomo Mitsui vs. Cardinal Health, | Sumitomo Mitsui vs. UnitedHealth Group Incorporated | Sumitomo Mitsui vs. CVS Health |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |