Correlation Between Sumitomo Electric and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Sumitomo Electric and Aptiv PLC 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 Electric and Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Electric Industries and Aptiv PLC, you can compare the effects of market volatilities on Sumitomo Electric and Aptiv PLC 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 Electric with a short position of Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Electric and Aptiv PLC.
Diversification Opportunities for Sumitomo Electric and Aptiv PLC
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sumitomo and Aptiv is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Electric Industries and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC and Sumitomo Electric 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 Electric Industries are associated (or correlated) with Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Sumitomo Electric i.e., Sumitomo Electric and Aptiv PLC go up and down completely randomly.
Pair Corralation between Sumitomo Electric and Aptiv PLC
Assuming the 90 days horizon Sumitomo Electric Industries is expected to generate 0.66 times more return on investment than Aptiv PLC. However, Sumitomo Electric Industries is 1.51 times less risky than Aptiv PLC. It trades about 0.34 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.21 per unit of risk. If you would invest 1,526 in Sumitomo Electric Industries on August 31, 2024 and sell it today you would earn a total of 345.00 from holding Sumitomo Electric Industries or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Electric Industries vs. Aptiv PLC
Performance |
| Timeline |
| Sumitomo Electric |
| Aptiv PLC |
Sumitomo Electric and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Electric and Aptiv PLC
The main advantage of trading using opposite Sumitomo Electric and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Electric position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| Sumitomo Electric vs. American Axle Manufacturing | Sumitomo Electric vs. Lear Corporation | Sumitomo Electric vs. Commercial Vehicle Group | Sumitomo Electric vs. Adient PLC |
| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |