Correlation Between Nomura Research and Hackett

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

By analyzing existing cross correlation between Nomura Research Institute and The Hackett Group, you can compare the effects of market volatilities on Nomura Research and Hackett 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 Research with a short position of Hackett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Research and Hackett.

Diversification Opportunities for Nomura Research and Hackett

-0.66

Correlation Coefficient

Nomura Research  Hackett

Excellent diversification

The 3 months correlation between Nomura and Hackett is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Research Institute and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group and Nomura Research 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 Research Institute are associated (or correlated) with Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of Nomura Research i.e., Nomura Research and Hackett go up and down completely randomly.

Pair Corralation between Nomura Research and Hackett

Assuming the 90 days horizon Nomura Research is expected to generate 2.99 times less return on investment than Hackett. But when comparing it to its historical volatility, Nomura Research Institute is 1.2 times less risky than Hackett. It trades about 0.06 of its potential returns per unit of risk. The Hackett Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,148  in The Hackett Group on September 17, 2024 and sell it today you would earn a total of  1,046  from holding The Hackett Group or generate 48.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Nomura Research Institute  vs.  The Hackett Group

Nomura Research Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Research Institute 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hackett Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Research and Hackett

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

The idea behind Nomura Research Institute and The Hackett Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.