Correlation Between Nomura Funds and Global Opportunities

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

By analyzing existing cross correlation between Nomura Funds Ireland and Global Opportunities Trust, you can compare the effects of market volatilities on Nomura Funds and Global Opportunities 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 Nomura Funds with a short position of Global Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Funds and Global Opportunities.

Diversification Opportunities for Nomura Funds and Global Opportunities

0.24

Correlation Coefficient

Nomura Funds  Global Opportunities

Modest diversification

The 3 months correlation between Nomura and Global is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Funds Ireland and Global Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunities and Nomura Funds 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 Nomura Funds Ireland are associated (or correlated) with Global Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunities has no effect on the direction of Nomura Funds i.e., Nomura Funds and Global Opportunities go up and down completely randomly.

Pair Corralation between Nomura Funds and Global Opportunities

Assuming the 90 days trading horizon Nomura Funds Ireland is expected to under-perform the Global Opportunities. But the fund apears to be less risky and, when comparing its historical volatility, Nomura Funds Ireland is 2.73 times less risky than Global Opportunities. The fund trades about -0.45 of its potential returns per unit of risk. The Global Opportunities Trust is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  28,400  in Global Opportunities Trust on October 4, 2024 and sell it today you would lose (200.00) from holding Global Opportunities Trust or give up 0.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Nomura Funds Ireland  vs.  Global Opportunities Trust

Nomura Funds Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Funds Ireland has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Nomura Funds is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Global Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Opportunities Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Global Opportunities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nomura Funds and Global Opportunities

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

The idea behind Nomura Funds Ireland and Global Opportunities Trust 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.