Correlation Between Sumitomo Chemical and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and STRAYER EDUCATION 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 STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical and STRAYER EDUCATION, you can compare the effects of market volatilities on Sumitomo Chemical and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and STRAYER EDUCATION.
Diversification Opportunities for Sumitomo Chemical and STRAYER EDUCATION
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumitomo and STRAYER is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and STRAYER EDUCATION
Assuming the 90 days horizon Sumitomo Chemical is expected to under-perform the STRAYER EDUCATION. In addition to that, Sumitomo Chemical is 1.19 times more volatile than STRAYER EDUCATION. It trades about 0.0 of its total potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.02 per unit of volatility. If you would invest 6,744 in STRAYER EDUCATION on December 13, 2024 and sell it today you would earn a total of 506.00 from holding STRAYER EDUCATION or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.67% |
| Values | Daily Returns |
Sumitomo Chemical vs. STRAYER EDUCATION
Performance |
| Timeline |
| Sumitomo Chemical |
| STRAYER EDUCATION |
Sumitomo Chemical and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and STRAYER EDUCATION
The main advantage of trading using opposite Sumitomo Chemical and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Sumitomo Chemical vs. JAPAN TOBACCO UNSPADR12 | ||
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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