Correlation Between Banco Santander and Nomura Holdings

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

By analyzing existing cross correlation between Banco Santander Brasil and Nomura Holdings ADR, you can compare the effects of market volatilities on Banco Santander and Nomura Holdings 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 Banco Santander with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Nomura Holdings.

Diversification Opportunities for Banco Santander and Nomura Holdings

0.87

Correlation Coefficient

Banco Santander  Nomura Holdings

Very poor diversification

The 3 months correlation between Banco and Nomura is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR and Banco Santander 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 Banco Santander Brasil are associated (or correlated) with Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Banco Santander i.e., Banco Santander and Nomura Holdings go up and down completely randomly.

Pair Corralation between Banco Santander and Nomura Holdings

Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Nomura Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.04 times less risky than Nomura Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Nomura Holdings ADR is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  648.00  in Nomura Holdings ADR on December 2, 2024 and sell it today you would lose (4.00) from holding Nomura Holdings ADR or give up 0.62% of portfolio value over 90 days.

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

Banco Santander Brasil  vs.  Nomura Holdings ADR

Banco Santander Brasil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Santander Brasil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Banco Santander may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nomura Holdings ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Banco Santander and Nomura Holdings

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

The idea behind Banco Santander Brasil and Nomura Holdings ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.