Correlation Between Nomura Holdings and Lazard

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

Diversification Opportunities for Nomura Holdings and Lazard

0.28

Correlation Coefficient

Nomura Holdings  Lazard

Modest diversification

The 3 months correlation between Nomura and Lazard is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard 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 Lazard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Lazard go up and down completely randomly.

Pair Corralation between Nomura Holdings and Lazard

Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 0.75 times more return on investment than Lazard. However, Nomura Holdings ADR is 1.34 times less risky than Lazard. It trades about 0.06 of its potential returns per unit of risk. Lazard is currently generating about -0.09 per unit of risk. If you would invest  620.00  in Nomura Holdings ADR on December 4, 2024 and sell it today you would earn a total of  31.00  from holding Nomura Holdings ADR or generate 5.0% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Lazard

Nomura Holdings ADR

Risk-Adjusted Performance

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 invariable primary indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Lazard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nomura Holdings and Lazard

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

The idea behind Nomura Holdings ADR and Lazard 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.