Correlation Between Sumitomo Mitsui and Dundee Precious
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Dundee Precious 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 Dundee Precious 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 Dundee Precious Metals, you can compare the effects of market volatilities on Sumitomo Mitsui and Dundee Precious 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 Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Dundee Precious.
Diversification Opportunities for Sumitomo Mitsui and Dundee Precious
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumitomo and Dundee is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Dundee Precious go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Dundee Precious
Given the investment horizon of 90 days Sumitomo Mitsui is expected to generate 1.43 times less return on investment than Dundee Precious. In addition to that, Sumitomo Mitsui is 1.0 times more volatile than Dundee Precious Metals. It trades about 0.08 of its total potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.11 per unit of volatility. If you would invest 649.00 in Dundee Precious Metals on August 25, 2024 and sell it today you would earn a total of 303.00 from holding Dundee Precious Metals or generate 46.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Dundee Precious Metals
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Dundee Precious Metals |
Sumitomo Mitsui and Dundee Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Dundee Precious
The main advantage of trading using opposite Sumitomo Mitsui and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Dundee Precious 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 Dundee Precious will offset losses from the drop in Dundee Precious' 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 |
| Dundee Precious vs. Ascendant Resources | Dundee Precious vs. Cantex Mine Development | Dundee Precious vs. Amarc Resources | Dundee Precious vs. Sterling Metals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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