Correlation Between Sumitomo Chemical and NORDSTROM Dusseldorf
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and NORDSTROM Dusseldorf 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 Chemical and NORDSTROM Dusseldorf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and NORDSTROM Dusseldorf, you can compare the effects of market volatilities on Sumitomo Chemical and NORDSTROM Dusseldorf 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 Chemical with a short position of NORDSTROM Dusseldorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and NORDSTROM Dusseldorf.
Diversification Opportunities for Sumitomo Chemical and NORDSTROM Dusseldorf
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumitomo and NORDSTROM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and NORDSTROM Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDSTROM Dusseldorf and Sumitomo Chemical 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 Chemical are associated (or correlated) with NORDSTROM Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDSTROM Dusseldorf has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and NORDSTROM Dusseldorf go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and NORDSTROM Dusseldorf
Assuming the 90 days horizon Sumitomo Chemical is expected to generate 7.19 times more return on investment than NORDSTROM Dusseldorf. However, Sumitomo Chemical is 7.19 times more volatile than NORDSTROM Dusseldorf. It trades about 0.05 of its potential returns per unit of risk. NORDSTROM Dusseldorf is currently generating about 0.0 per unit of risk. If you would invest 200.00 in Sumitomo Chemical on November 29, 2024 and sell it today you would earn a total of 8.00 from holding Sumitomo Chemical or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Sumitomo Chemical vs. NORDSTROM Dusseldorf
Performance |
| Timeline |
| Sumitomo Chemical |
| NORDSTROM Dusseldorf |
Sumitomo Chemical and NORDSTROM Dusseldorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and NORDSTROM Dusseldorf
The main advantage of trading using opposite Sumitomo Chemical and NORDSTROM Dusseldorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, NORDSTROM Dusseldorf 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 NORDSTROM Dusseldorf will offset losses from the drop in NORDSTROM Dusseldorf's long position.| Sumitomo Chemical vs. Mount Gibson Iron | Sumitomo Chemical vs. Xiwang Special Steel | Sumitomo Chemical vs. Sch Environnement SA | Sumitomo Chemical vs. SILICON LABORATOR |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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