Correlation Between Sumitomo Mitsui and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Globex Mining 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 Globex Mining 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 Globex Mining Enterprises, you can compare the effects of market volatilities on Sumitomo Mitsui and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Globex Mining.
Diversification Opportunities for Sumitomo Mitsui and Globex Mining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Globex is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Globex Mining go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Globex Mining
Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to generate 2.58 times more return on investment than Globex Mining. However, Sumitomo Mitsui is 2.58 times more volatile than Globex Mining Enterprises. It trades about 0.13 of its potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.01 per unit of risk. If you would invest 2,048 in Sumitomo Mitsui Financial on August 29, 2024 and sell it today you would earn a total of 248.00 from holding Sumitomo Mitsui Financial or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Globex Mining Enterprises
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Globex Mining Enterprises |
Sumitomo Mitsui and Globex Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Globex Mining
The main advantage of trading using opposite Sumitomo Mitsui and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. HSBC Holdings PLC | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui vs. Citigroup |
| Globex Mining vs. Silver Hammer Mining | Globex Mining vs. Reyna Silver Corp | Globex Mining vs. Guanajuato Silver | Globex Mining vs. Silver One Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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