Correlation Between Sumitomo Mitsui and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Stella Jones 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 Stella Jones 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 Stella Jones, you can compare the effects of market volatilities on Sumitomo Mitsui and Stella Jones 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 Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Stella Jones.
Diversification Opportunities for Sumitomo Mitsui and Stella Jones
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and Stella is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Stella Jones go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Stella Jones
Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to generate 19.36 times more return on investment than Stella Jones. However, Sumitomo Mitsui is 19.36 times more volatile than Stella Jones. It trades about 0.11 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 per unit of risk. If you would invest 1,005 in Sumitomo Mitsui Financial on August 31, 2024 and sell it today you would earn a total of 1,359 from holding Sumitomo Mitsui Financial or generate 135.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 85.47% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Stella Jones
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Stella Jones |
Sumitomo Mitsui and Stella Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Stella Jones
The main advantage of trading using opposite Sumitomo Mitsui and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Stella Jones 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 Stella Jones will offset losses from the drop in Stella Jones' long position.| Sumitomo Mitsui vs. Bank of America | Sumitomo Mitsui vs. Bank of America | Sumitomo Mitsui vs. Bank of America | Sumitomo Mitsui vs. China Construction Bank |
| Stella Jones vs. Canfor | Stella Jones vs. West Fraser Timber | Stella Jones vs. Interfor | Stella Jones vs. Svenska Cellulosa Aktiebolaget |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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