Correlation Between Sumitomo Mitsui and Activision Blizzard
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Activision Blizzard 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 Activision Blizzard 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 Activision Blizzard, you can compare the effects of market volatilities on Sumitomo Mitsui and Activision Blizzard 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 Activision Blizzard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Activision Blizzard.
Diversification Opportunities for Sumitomo Mitsui and Activision Blizzard
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Activision is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard 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 Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Activision Blizzard go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Activision Blizzard
Given the investment horizon of 90 days Sumitomo Mitsui Financial is expected to generate 1.09 times more return on investment than Activision Blizzard. However, Sumitomo Mitsui is 1.09 times more volatile than Activision Blizzard. It trades about 0.1 of its potential returns per unit of risk. Activision Blizzard is currently generating about 0.08 per unit of risk. If you would invest 637.00 in Sumitomo Mitsui Financial on August 27, 2024 and sell it today you would earn a total of 790.00 from holding Sumitomo Mitsui Financial or generate 124.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.85% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Activision Blizzard
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Activision Blizzard |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sumitomo Mitsui and Activision Blizzard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Activision Blizzard
The main advantage of trading using opposite Sumitomo Mitsui and Activision Blizzard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Activision Blizzard 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 Activision Blizzard will offset losses from the drop in Activision Blizzard's long position.| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. HSBC Holdings PLC |
| Activision Blizzard vs. Take Two Interactive Software | Activision Blizzard vs. Nintendo Co ADR | Activision Blizzard vs. NetEase | Activision Blizzard vs. Playtika Holding Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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