Correlation Between Sumitomo Mitsui and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline, you can compare the effects of market volatilities on Sumitomo Mitsui and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Pembina Pipeline.
Diversification Opportunities for Sumitomo Mitsui and Pembina Pipeline
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Pembina is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Pembina Pipeline
Given the investment horizon of 90 days Sumitomo Mitsui Financial is expected to generate 1.6 times more return on investment than Pembina Pipeline. However, Sumitomo Mitsui is 1.6 times more volatile than Pembina Pipeline. It trades about 0.1 of its potential returns per unit of risk. Pembina Pipeline is currently generating about 0.09 per unit of risk. If you would invest 645.00 in Sumitomo Mitsui Financial on September 2, 2024 and sell it today you would earn a total of 836.00 from holding Sumitomo Mitsui Financial or generate 129.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Pembina Pipeline
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Pembina Pipeline |
Sumitomo Mitsui and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Pembina Pipeline
The main advantage of trading using opposite Sumitomo Mitsui and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline'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 |
| Pembina Pipeline vs. Bill Com Holdings | Pembina Pipeline vs. Bt Brands | Pembina Pipeline vs. The Wendys Co | Pembina Pipeline vs. Kura Sushi USA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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