Correlation Between Mizuho Financial and Incitec Pivot

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

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

Diversification Opportunities for Mizuho Financial and Incitec Pivot

-0.29

Correlation Coefficient

Mizuho Financial  Incitec Pivot

Very good diversification

The 3 months correlation between Mizuho and Incitec is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and Incitec Pivot Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incitec Pivot and Mizuho 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 Mizuho Financial Group are associated (or correlated) with Incitec Pivot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incitec Pivot has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and Incitec Pivot go up and down completely randomly.

Pair Corralation between Mizuho Financial and Incitec Pivot

Considering the 90-day investment horizon Mizuho Financial Group is expected to generate 0.62 times more return on investment than Incitec Pivot. However, Mizuho Financial Group is 1.62 times less risky than Incitec Pivot. It trades about 0.06 of its potential returns per unit of risk. Incitec Pivot Ltd is currently generating about 0.01 per unit of risk. If you would invest  296.00  in Mizuho Financial Group on October 3, 2024 and sell it today you would earn a total of  196.00  from holding Mizuho Financial Group or generate 66.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

Mizuho Financial Group  vs.  Incitec Pivot Ltd

Mizuho Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Incitec Pivot

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Incitec Pivot Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Incitec Pivot is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mizuho Financial and Incitec Pivot

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

The idea behind Mizuho Financial Group and Incitec Pivot Ltd 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.