Correlation Between Global Opportunities and Nomura Funds

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

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

Diversification Opportunities for Global Opportunities and Nomura Funds

0.24

Correlation Coefficient

Global Opportunities  Nomura Funds

Modest diversification

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

Pair Corralation between Global Opportunities and Nomura Funds

Assuming the 90 days trading horizon Global Opportunities Trust is expected to generate 2.73 times more return on investment than Nomura Funds. However, Global Opportunities is 2.73 times more volatile than Nomura Funds Ireland. It trades about -0.02 of its potential returns per unit of risk. Nomura Funds Ireland is currently generating about -0.45 per unit of risk. 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

Global Opportunities Trust  vs.  Nomura Funds Ireland

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.

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.

Pair Trading with Global Opportunities and Nomura Funds

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

The idea behind Global Opportunities Trust and Nomura Funds Ireland 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.