Correlation Between 78409VBL7 and Nomura Holdings

Can any of the company-specific risk be diversified away by investing in both 78409VBL7 and Nomura Holdings 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 78409VBL7 and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPGI 37 01 MAR 52 and Nomura Holdings ADR, you can compare the effects of market volatilities on 78409VBL7 and Nomura Holdings 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 78409VBL7 with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78409VBL7 and Nomura Holdings.

Diversification Opportunities for 78409VBL7 and Nomura Holdings

-0.27

Correlation Coefficient

78409VBL7  Nomura Holdings

Very good diversification

The 3 months correlation between 78409VBL7 and Nomura is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPGI 37 01 MAR 52 and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR and 78409VBL7 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 SPGI 37 01 MAR 52 are associated (or correlated) with Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of 78409VBL7 i.e., 78409VBL7 and Nomura Holdings go up and down completely randomly.

Pair Corralation between 78409VBL7 and Nomura Holdings

Assuming the 90 days trading horizon SPGI 37 01 MAR 52 is expected to under-perform the Nomura Holdings. But the bond apears to be less risky and, when comparing its historical volatility, SPGI 37 01 MAR 52 is 1.4 times less risky than Nomura Holdings. The bond trades about -0.31 of its potential returns per unit of risk. The Nomura Holdings ADR is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Nomura Holdings ADR on September 25, 2024 and sell it today you would lose (31.00) from holding Nomura Holdings ADR or give up 5.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

SPGI 37 01 MAR 52  vs.  Nomura Holdings ADR

SPGI 37 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPGI 37 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SPGI 37 01 MAR 52 investors.

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.

Pair Trading with 78409VBL7 and Nomura Holdings

The main advantage of trading using opposite 78409VBL7 and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78409VBL7 position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.

The idea behind SPGI 37 01 MAR 52 and Nomura Holdings ADR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.