Correlation Between Nomura Holdings and KeyCorp

Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on Nomura Holdings and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and KeyCorp.

Diversification Opportunities for Nomura Holdings and KeyCorp

-0.41

Correlation Coefficient

Nomura Holdings  KeyCorp

Very good diversification

The 3 months correlation between Nomura and KeyCorp is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and KeyCorp go up and down completely randomly.

Pair Corralation between Nomura Holdings and KeyCorp

Considering the 90-day investment horizon Nomura Holdings ADR is expected to under-perform the KeyCorp. In addition to that, Nomura Holdings is 1.27 times more volatile than KeyCorp. It trades about -0.29 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.01 per unit of volatility. If you would invest  2,437  in KeyCorp on October 15, 2024 and sell it today you would lose (5.00) from holding KeyCorp or give up 0.21% 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.  KeyCorp

Nomura Holdings ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 5 (%) 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.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nomura Holdings and KeyCorp

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

The idea behind Nomura Holdings ADR and KeyCorp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.