Correlation Between Sumitomo Mitsui and Stelmine Canada
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Stelmine Canada 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 Stelmine Canada 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 Stelmine Canada, you can compare the effects of market volatilities on Sumitomo Mitsui and Stelmine Canada 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 Stelmine Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Stelmine Canada.
Diversification Opportunities for Sumitomo Mitsui and Stelmine Canada
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Stelmine is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada 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 Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Stelmine Canada go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Stelmine Canada
Assuming the 90 days horizon Sumitomo Mitsui is expected to generate 27.89 times less return on investment than Stelmine Canada. But when comparing it to its historical volatility, Sumitomo Mitsui Financial is 5.4 times less risky than Stelmine Canada. It trades about 0.03 of its potential returns per unit of risk. Stelmine Canada is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.88 in Stelmine Canada on October 24, 2024 and sell it today you would earn a total of 0.01 from holding Stelmine Canada or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Stelmine Canada
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Stelmine Canada |
Sumitomo Mitsui and Stelmine Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Stelmine Canada
The main advantage of trading using opposite Sumitomo Mitsui and Stelmine Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Stelmine Canada 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 Stelmine Canada will offset losses from the drop in Stelmine Canada'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 |
| Stelmine Canada vs. Fury Gold Mines | Stelmine Canada vs. Ivanhoe Mines | Stelmine Canada vs. Americas Silver Corp | Stelmine Canada vs. StrikePoint Gold |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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