Correlation Between TripAdvisor and Sumitomo Metal

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

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

Diversification Opportunities for TripAdvisor and Sumitomo Metal

0.44

Correlation Coefficient

TripAdvisor  Sumitomo Metal

Very weak diversification

The 3 months correlation between TripAdvisor and Sumitomo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding TripAdvisor and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and TripAdvisor 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 TripAdvisor are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of TripAdvisor i.e., TripAdvisor and Sumitomo Metal go up and down completely randomly.

Pair Corralation between TripAdvisor and Sumitomo Metal

Given the investment horizon of 90 days TripAdvisor is expected to generate 1.94 times more return on investment than Sumitomo Metal. However, TripAdvisor is 1.94 times more volatile than Sumitomo Metal Mining. It trades about 0.16 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about 0.02 per unit of risk. If you would invest  1,273  in TripAdvisor on May 3, 2025 and sell it today you would earn a total of  476.00  from holding TripAdvisor or generate 37.39% return on investment over 90 days.

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

TripAdvisor  vs.  Sumitomo Metal Mining

TripAdvisor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TripAdvisor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, TripAdvisor reported solid returns over the last few months and may actually be approaching a breakup point.

Sumitomo Metal Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Metal Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sumitomo Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TripAdvisor and Sumitomo Metal

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

The idea behind TripAdvisor and Sumitomo Metal Mining 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.