Correlation Between Sumitomo Mitsui and UBS Group

Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and UBS Group 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 Mitsui and UBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumitomo Mitsui Financial and UBS Group AG, you can compare the effects of market volatilities on Sumitomo Mitsui and UBS Group 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 Mitsui with a short position of UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and UBS Group.

Diversification Opportunities for Sumitomo Mitsui and UBS Group

0.56

Correlation Coefficient

Sumitomo Mitsui  UBS Group

Very weak diversification

The 3 months correlation between Sumitomo and UBS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG and Sumitomo Mitsui 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 Mitsui Financial are associated (or correlated) with UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and UBS Group go up and down completely randomly.

Pair Corralation between Sumitomo Mitsui and UBS Group

Given the investment horizon of 90 days Sumitomo Mitsui is expected to generate 2.32 times less return on investment than UBS Group. But when comparing it to its historical volatility, Sumitomo Mitsui Financial is 1.08 times less risky than UBS Group. It trades about 0.08 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,077  in UBS Group AG on May 4, 2025 and sell it today you would earn a total of  590.00  from holding UBS Group AG or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sumitomo Mitsui Financial  vs.  UBS Group AG

Sumitomo Mitsui Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Sumitomo Mitsui may actually be approaching a critical reversion point that can send shares even higher in September 2025.

UBS Group AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, UBS Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sumitomo Mitsui and UBS Group

The main advantage of trading using opposite Sumitomo Mitsui and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group's long position.

The idea behind Sumitomo Mitsui Financial and UBS Group AG 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.