Correlation Between CNO Financial and Nomura Holdings

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

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

Diversification Opportunities for CNO Financial and Nomura Holdings

-0.56

Correlation Coefficient

CNO Financial  Nomura Holdings

Excellent diversification

The 3 months correlation between CNO and Nomura is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CNO Financial Group 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 CNO Financial 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 CNO Financial Group 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 CNO Financial i.e., CNO Financial and Nomura Holdings go up and down completely randomly.

Pair Corralation between CNO Financial and Nomura Holdings

Assuming the 90 days trading horizon CNO Financial Group is expected to generate 0.76 times more return on investment than Nomura Holdings. However, CNO Financial Group is 1.32 times less risky than Nomura Holdings. It trades about 0.02 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.0 per unit of risk. If you would invest  1,896  in CNO Financial Group on October 9, 2024 and sell it today you would earn a total of  48.00  from holding CNO Financial Group or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.46%
Values	Daily Returns

CNO Financial Group  vs.  Nomura Holdings ADR

CNO Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNO Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nomura Holdings ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CNO Financial and Nomura Holdings

The main advantage of trading using opposite CNO Financial and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNO Financial 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 CNO Financial Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.