Correlation Between Nomura Holdings and Moncler SpA

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

By analyzing existing cross correlation between Nomura Holdings and Moncler SpA, you can compare the effects of market volatilities on Nomura Holdings and Moncler SpA 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 Moncler SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Moncler SpA.

Diversification Opportunities for Nomura Holdings and Moncler SpA

-0.72

Correlation Coefficient

Nomura Holdings  Moncler SpA

Pay attention - limited upside

The 3 months correlation between Nomura and Moncler is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA 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 are associated (or correlated) with Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Moncler SpA go up and down completely randomly.

Pair Corralation between Nomura Holdings and Moncler SpA

Assuming the 90 days horizon Nomura Holdings is expected to under-perform the Moncler SpA. But the stock apears to be less risky and, when comparing its historical volatility, Nomura Holdings is 1.08 times less risky than Moncler SpA. The stock trades about -0.13 of its potential returns per unit of risk. The Moncler SpA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,632  in Moncler SpA on September 23, 2024 and sell it today you would earn a total of  384.00  from holding Moncler SpA or generate 8.29% return on investment over 90 days.

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

Nomura Holdings  vs.  Moncler SpA

Nomura Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Moncler SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Moncler SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nomura Holdings and Moncler SpA

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

The idea behind Nomura Holdings and Moncler SpA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.