Correlation Between Sumitomo and Marubeni
Can any of the company-specific risk be diversified away by investing in both Sumitomo and Marubeni 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 Marubeni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo and Marubeni, you can compare the effects of market volatilities on Sumitomo and Marubeni 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 Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo and Marubeni.
Diversification Opportunities for Sumitomo and Marubeni
Average diversification
The 3 months correlation between Sumitomo and Marubeni is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Sumitomo i.e., Sumitomo and Marubeni go up and down completely randomly.
Pair Corralation between Sumitomo and Marubeni
Assuming the 90 days trading horizon Sumitomo is expected to under-perform the Marubeni. In addition to that, Sumitomo is 1.18 times more volatile than Marubeni. It trades about -0.14 of its total potential returns per unit of risk. Marubeni is currently generating about -0.08 per unit of volatility. If you would invest 1,465 in Marubeni on November 4, 2024 and sell it today you would lose (35.00) from holding Marubeni or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo vs. Marubeni
Performance |
| Timeline |
| Sumitomo |
| Marubeni |
Sumitomo and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo and Marubeni
The main advantage of trading using opposite Sumitomo and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.| Sumitomo vs. NORTHEAST UTILITIES | Sumitomo vs. UNITED UTILITIES GR | Sumitomo vs. United Utilities Group | Sumitomo vs. BURLINGTON STORES |
| Marubeni vs. UPDATE SOFTWARE | Marubeni vs. Align Technology | Marubeni vs. DXC Technology Co | Marubeni vs. ScanSource |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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