Correlation Between Sumitomo and Grupo Bimbo
Can any of the company-specific risk be diversified away by investing in both Sumitomo and Grupo Bimbo 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 and Grupo Bimbo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo and Grupo Bimbo SAB, you can compare the effects of market volatilities on Sumitomo and Grupo Bimbo 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 with a short position of Grupo Bimbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo and Grupo Bimbo.
Diversification Opportunities for Sumitomo and Grupo Bimbo
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Grupo is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Sumitomo 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 are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Sumitomo i.e., Sumitomo and Grupo Bimbo go up and down completely randomly.
Pair Corralation between Sumitomo and Grupo Bimbo
Assuming the 90 days horizon Sumitomo is expected to generate 0.86 times more return on investment than Grupo Bimbo. However, Sumitomo is 1.17 times less risky than Grupo Bimbo. It trades about 0.17 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.19 per unit of risk. If you would invest 2,045 in Sumitomo on September 12, 2024 and sell it today you would earn a total of 165.00 from holding Sumitomo or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sumitomo vs. Grupo Bimbo SAB
Performance |
| Timeline |
| Sumitomo |
| Grupo Bimbo SAB |
Sumitomo and Grupo Bimbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo and Grupo Bimbo
The main advantage of trading using opposite Sumitomo and Grupo Bimbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo position performs unexpectedly, Grupo Bimbo 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 Grupo Bimbo will offset losses from the drop in Grupo Bimbo's long position.The idea behind Sumitomo and Grupo Bimbo SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grupo Bimbo vs. High Liner Foods | Grupo Bimbo vs. Lamb Weston Holdings | Grupo Bimbo vs. Kellanova | Grupo Bimbo vs. J J Snack |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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