Correlation Between Sumitomo Mitsui and Banco Bilbao
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Banco Bilbao 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 Banco Bilbao 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 Banco Bilbao Vizcaya, you can compare the effects of market volatilities on Sumitomo Mitsui and Banco Bilbao 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 Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Banco Bilbao.
Diversification Opportunities for Sumitomo Mitsui and Banco Bilbao
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Banco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya 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 Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Banco Bilbao go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Banco Bilbao
Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to generate 1.09 times more return on investment than Banco Bilbao. However, Sumitomo Mitsui is 1.09 times more volatile than Banco Bilbao Vizcaya. It trades about 0.03 of its potential returns per unit of risk. Banco Bilbao Vizcaya is currently generating about -0.22 per unit of risk. If you would invest 2,417 in Sumitomo Mitsui Financial on September 13, 2024 and sell it today you would earn a total of 28.00 from holding Sumitomo Mitsui Financial or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Banco Bilbao Vizcaya
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Banco Bilbao Vizcaya |
Sumitomo Mitsui and Banco Bilbao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Banco Bilbao
The main advantage of trading using opposite Sumitomo Mitsui and Banco Bilbao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Banco Bilbao 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 Banco Bilbao will offset losses from the drop in Banco Bilbao's long position.| Sumitomo Mitsui vs. Banco Bilbao Vizcaya | Sumitomo Mitsui vs. ABN AMRO Bank | Sumitomo Mitsui vs. ING Groep NV | Sumitomo Mitsui vs. Banco de Sabadell |
| Banco Bilbao vs. Bank of America | Banco Bilbao vs. Barclays PLC | Banco Bilbao vs. Bank of America | Banco Bilbao vs. ABN AMRO Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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