Correlation Between SUMITOMO P and Snap-on Incorporated
Can any of the company-specific risk be diversified away by investing in both SUMITOMO P and Snap-on Incorporated 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 P and Snap-on Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SUMITOMO P SP and Snap on Incorporated, you can compare the effects of market volatilities on SUMITOMO P and Snap-on Incorporated 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 P with a short position of Snap-on Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUMITOMO P and Snap-on Incorporated.
Diversification Opportunities for SUMITOMO P and Snap-on Incorporated
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SUMITOMO and Snap-on is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO P SP and Snap on Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap-on Incorporated and SUMITOMO P 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 P SP are associated (or correlated) with Snap-on Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap-on Incorporated has no effect on the direction of SUMITOMO P i.e., SUMITOMO P and Snap-on Incorporated go up and down completely randomly.
Pair Corralation between SUMITOMO P and Snap-on Incorporated
Assuming the 90 days trading horizon SUMITOMO P is expected to generate 1.2 times less return on investment than Snap-on Incorporated. In addition to that, SUMITOMO P is 1.44 times more volatile than Snap on Incorporated. It trades about 0.05 of its total potential returns per unit of risk. Snap on Incorporated is currently generating about 0.08 per unit of volatility. If you would invest 20,914 in Snap on Incorporated on September 2, 2024 and sell it today you would earn a total of 13,956 from holding Snap on Incorporated or generate 66.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SUMITOMO P SP vs. Snap on Incorporated
Performance |
| Timeline |
| SUMITOMO P SP |
| Snap-on Incorporated |
SUMITOMO P and Snap-on Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SUMITOMO P and Snap-on Incorporated
The main advantage of trading using opposite SUMITOMO P and Snap-on Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUMITOMO P position performs unexpectedly, Snap-on Incorporated 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 Snap-on Incorporated will offset losses from the drop in Snap-on Incorporated's long position.| SUMITOMO P vs. CompuGroup Medical SE | SUMITOMO P vs. ONWARD MEDICAL BV | SUMITOMO P vs. TITANIUM TRANSPORTGROUP | SUMITOMO P vs. Compugroup Medical SE |
| Snap-on Incorporated vs. Brockhaus Capital Management | Snap-on Incorporated vs. Darden Restaurants | Snap-on Incorporated vs. Digilife Technologies Limited | Snap-on Incorporated vs. BJs Restaurants |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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