Correlation Between Sumitomo Electric and Bridgestone
Can any of the company-specific risk be diversified away by investing in both Sumitomo Electric and Bridgestone 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 Bridgestone 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 Bridgestone, you can compare the effects of market volatilities on Sumitomo Electric and Bridgestone 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 Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Electric and Bridgestone.
Diversification Opportunities for Sumitomo Electric and Bridgestone
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumitomo and Bridgestone is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Electric Industries and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone 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 Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of Sumitomo Electric i.e., Sumitomo Electric and Bridgestone go up and down completely randomly.
Pair Corralation between Sumitomo Electric and Bridgestone
Assuming the 90 days horizon Sumitomo Electric Industries is expected to generate 0.99 times more return on investment than Bridgestone. However, Sumitomo Electric Industries is 1.01 times less risky than Bridgestone. It trades about 0.29 of its potential returns per unit of risk. Bridgestone is currently generating about 0.04 per unit of risk. If you would invest 2,850 in Sumitomo Electric Industries on September 11, 2025 and sell it today you would earn a total of 1,694 from holding Sumitomo Electric Industries or generate 59.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumitomo Electric Industries vs. Bridgestone
Performance |
| Timeline |
| Sumitomo Electric |
| Bridgestone |
Sumitomo Electric and Bridgestone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Electric and Bridgestone
The main advantage of trading using opposite Sumitomo Electric and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Electric position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.| Sumitomo Electric vs. Gt Legend Automotive | Sumitomo Electric vs. Agristar | Sumitomo Electric vs. Lmp Automotive Holdings | Sumitomo Electric vs. Esports Entertainment Group |
| Bridgestone vs. Sumitomo Electric Industries | Bridgestone vs. Toyota Industries | Bridgestone vs. DENSO | Bridgestone vs. Toyota Industries Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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