Correlation Between Juniata Valley and Nomura Holdings

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

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

Diversification Opportunities for Juniata Valley and Nomura Holdings

0.8

Correlation Coefficient

Juniata Valley  Nomura Holdings

Very poor diversification

The 3 months correlation between Juniata and Nomura is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Juniata Valley Financial 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 Juniata Valley 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 Juniata Valley Financial 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 Juniata Valley i.e., Juniata Valley and Nomura Holdings go up and down completely randomly.

Pair Corralation between Juniata Valley and Nomura Holdings

Given the investment horizon of 90 days Juniata Valley Financial is expected to generate 1.89 times more return on investment than Nomura Holdings. However, Juniata Valley is 1.89 times more volatile than Nomura Holdings ADR. It trades about 0.05 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about -0.1 per unit of risk. If you would invest  1,300  in Juniata Valley Financial on September 27, 2024 and sell it today you would earn a total of  25.00  from holding Juniata Valley Financial or generate 1.92% return on investment over 90 days.

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

Juniata Valley Financial  vs.  Nomura Holdings ADR

Juniata Valley Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Nomura Holdings ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Juniata Valley and Nomura Holdings

The main advantage of trading using opposite Juniata Valley and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniata Valley 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 Juniata Valley Financial 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.