Correlation Between Nomura Holdings and Bluerock Homes

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

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

Diversification Opportunities for Nomura Holdings and Bluerock Homes

-0.54

Correlation Coefficient

Nomura Holdings  Bluerock Homes

Excellent diversification

The 3 months correlation between Nomura and Bluerock is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Bluerock Homes Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluerock Homes Trust and Nomura Holdings 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 Nomura Holdings ADR are associated (or correlated) with Bluerock Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluerock Homes Trust has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Bluerock Homes go up and down completely randomly.

Pair Corralation between Nomura Holdings and Bluerock Homes

Considering the 90-day investment horizon Nomura Holdings ADR is expected to under-perform the Bluerock Homes. But the stock apears to be less risky and, when comparing its historical volatility, Nomura Holdings ADR is 1.12 times less risky than Bluerock Homes. The stock trades about -0.18 of its potential returns per unit of risk. The Bluerock Homes Trust is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,375  in Bluerock Homes Trust on September 25, 2024 and sell it today you would lose (36.00) from holding Bluerock Homes Trust or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nomura Holdings ADR  vs.  Bluerock Homes Trust

Nomura Holdings ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 6 (%) 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 January 2025.

Bluerock Homes Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluerock Homes Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nomura Holdings and Bluerock Homes

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

The idea behind Nomura Holdings ADR and Bluerock Homes Trust 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.