Correlation Between Sumitomo Mitsui and Talon Metals
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Talon Metals 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 Talon Metals 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 Talon Metals Corp, you can compare the effects of market volatilities on Sumitomo Mitsui and Talon Metals 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 Talon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Talon Metals.
Diversification Opportunities for Sumitomo Mitsui and Talon Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and Talon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and Talon Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon Metals Corp 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 Talon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Metals Corp has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Talon Metals go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Talon Metals
Assuming the 90 days horizon Sumitomo Mitsui Financial is expected to generate 0.84 times more return on investment than Talon Metals. However, Sumitomo Mitsui Financial is 1.19 times less risky than Talon Metals. It trades about 0.08 of its potential returns per unit of risk. Talon Metals Corp is currently generating about -0.05 per unit of risk. If you would invest 1,403 in Sumitomo Mitsui Financial on August 25, 2024 and sell it today you would earn a total of 1,058 from holding Sumitomo Mitsui Financial or generate 75.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.69% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. Talon Metals Corp
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Talon Metals Corp |
Sumitomo Mitsui and Talon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Talon Metals
The main advantage of trading using opposite Sumitomo Mitsui and Talon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Talon Metals 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 Talon Metals will offset losses from the drop in Talon Metals' long position.| Sumitomo Mitsui vs. ANZ Group Holdings | Sumitomo Mitsui vs. Westpac Banking | Sumitomo Mitsui vs. National Australia Bank | Sumitomo Mitsui vs. Agricultural Bank |
| Talon Metals vs. Ascendant Resources | Talon Metals vs. Cantex Mine Development | Talon Metals vs. Amarc Resources | Talon Metals vs. Sterling Metals Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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