Correlation Between Sumitomo Chemical and Public Storage
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Public Storage 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 Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and Public Storage, you can compare the effects of market volatilities on Sumitomo Chemical and Public Storage 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 Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Public Storage.
Diversification Opportunities for Sumitomo Chemical and Public Storage
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sumitomo and Public is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Public Storage go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Public Storage
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the Public Storage. But the stock apears to be less risky and, when comparing its historical volatility, Sumitomo Chemical is 1.29 times less risky than Public Storage. The stock trades about -0.27 of its potential returns per unit of risk. The Public Storage is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 30,930 in Public Storage on August 30, 2024 and sell it today you would earn a total of 1,990 from holding Public Storage or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Chemical vs. Public Storage
Performance |
| Timeline |
| Sumitomo Chemical |
| Public Storage |
Sumitomo Chemical and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Public Storage
The main advantage of trading using opposite Sumitomo Chemical and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.| Sumitomo Chemical vs. Air Liquide SA | Sumitomo Chemical vs. Air Products and | Sumitomo Chemical vs. Shin Etsu Chemical Co | Sumitomo Chemical vs. BASF SE |
| Public Storage vs. EastGroup Properties | Public Storage vs. Superior Plus Corp | Public Storage vs. SIVERS SEMICONDUCTORS AB | Public Storage vs. Talanx AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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