Correlation Between Stag Industrial and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Stag Industrial and Sumitomo Mitsui 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 Stag Industrial and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stag Industrial and Sumitomo Mitsui Construction, you can compare the effects of market volatilities on Stag Industrial and Sumitomo Mitsui 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 Stag Industrial with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stag Industrial and Sumitomo Mitsui.
Diversification Opportunities for Stag Industrial and Sumitomo Mitsui
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stag and Sumitomo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and Sumitomo Mitsui Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Cons and Stag Industrial 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 Stag Industrial are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Cons has no effect on the direction of Stag Industrial i.e., Stag Industrial and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Stag Industrial and Sumitomo Mitsui
Assuming the 90 days trading horizon Stag Industrial is expected to generate 1.15 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, Stag Industrial is 1.42 times less risky than Sumitomo Mitsui. It trades about 0.14 of its potential returns per unit of risk. Sumitomo Mitsui Construction is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 246.00 in Sumitomo Mitsui Construction on November 5, 2024 and sell it today you would earn a total of 8.00 from holding Sumitomo Mitsui Construction or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stag Industrial vs. Sumitomo Mitsui Construction
Performance |
| Timeline |
| Stag Industrial |
| Sumitomo Mitsui Cons |
Stag Industrial and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stag Industrial and Sumitomo Mitsui
The main advantage of trading using opposite Stag Industrial and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stag Industrial position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Stag Industrial vs. ON SEMICONDUCTOR | Stag Industrial vs. TRI CHEMICAL LABORATINC | Stag Industrial vs. TOREX SEMICONDUCTOR LTD | Stag Industrial vs. X FAB Silicon Foundries |
| Sumitomo Mitsui vs. FAST RETAIL ADR | Sumitomo Mitsui vs. GREENX METALS LTD | Sumitomo Mitsui vs. Nippon Light Metal | Sumitomo Mitsui vs. FLOW TRADERS LTD |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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