Correlation Between Scotts Miracle-Gro and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both Scotts Miracle-Gro and Sumitomo Rubber 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 Scotts Miracle-Gro and Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Scotts Miracle Gro and Sumitomo Rubber Industries, you can compare the effects of market volatilities on Scotts Miracle-Gro and Sumitomo Rubber 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 Scotts Miracle-Gro with a short position of Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle-Gro and Sumitomo Rubber.
Diversification Opportunities for Scotts Miracle-Gro and Sumitomo Rubber
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scotts and Sumitomo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Scotts Miracle Gro and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu and Scotts Miracle-Gro 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 The Scotts Miracle Gro are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of Scotts Miracle-Gro i.e., Scotts Miracle-Gro and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between Scotts Miracle-Gro and Sumitomo Rubber
Assuming the 90 days trading horizon The Scotts Miracle Gro is expected to generate 1.22 times more return on investment than Sumitomo Rubber. However, Scotts Miracle-Gro is 1.22 times more volatile than Sumitomo Rubber Industries. It trades about 0.07 of its potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.04 per unit of risk. If you would invest 4,221 in The Scotts Miracle Gro on September 12, 2024 and sell it today you would earn a total of 2,759 from holding The Scotts Miracle Gro or generate 65.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Scotts Miracle Gro vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| Scotts Miracle-Gro |
| Sumitomo Rubber Indu |
Scotts Miracle-Gro and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotts Miracle-Gro and Sumitomo Rubber
The main advantage of trading using opposite Scotts Miracle-Gro and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle-Gro position performs unexpectedly, Sumitomo Rubber 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 Rubber will offset losses from the drop in Sumitomo Rubber's long position.| Scotts Miracle-Gro vs. Sumitomo Rubber Industries | Scotts Miracle-Gro vs. GigaMedia | Scotts Miracle-Gro vs. CNVISION MEDIA | Scotts Miracle-Gro vs. Compagnie Plastic Omnium |
| Sumitomo Rubber vs. Superior Plus Corp | Sumitomo Rubber vs. NMI Holdings | Sumitomo Rubber vs. SIVERS SEMICONDUCTORS AB | Sumitomo Rubber vs. NorAm Drilling AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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