Correlation Between Sumitomo Mitsui and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Whitbread Plc 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 Whitbread Plc 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 Whitbread plc, you can compare the effects of market volatilities on Sumitomo Mitsui and Whitbread Plc 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 Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Whitbread Plc.
Diversification Opportunities for Sumitomo Mitsui and Whitbread Plc
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Whitbread is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc 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 Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Whitbread Plc go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Whitbread Plc
Given the investment horizon of 90 days Sumitomo Mitsui Financial is expected to generate 2.11 times more return on investment than Whitbread Plc. However, Sumitomo Mitsui is 2.11 times more volatile than Whitbread plc. It trades about 0.12 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.23 per unit of risk. If you would invest 1,417 in Sumitomo Mitsui Financial on October 20, 2024 and sell it today you would earn a total of 52.00 from holding Sumitomo Mitsui Financial or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Whitbread plc
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Whitbread plc |
Sumitomo Mitsui and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Whitbread Plc
The main advantage of trading using opposite Sumitomo Mitsui and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Whitbread Plc 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 Whitbread Plc will offset losses from the drop in Whitbread Plc'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 |
| Whitbread Plc vs. National CineMedia | Whitbread Plc vs. Here Media | Whitbread Plc vs. Ubisoft Entertainment | Whitbread Plc vs. Zhihu Inc ADR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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