Correlation Between Axos Financial and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Axos Financial 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 Axos Financial and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Nomura Holdings ADR, you can compare the effects of market volatilities on Axos Financial 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 Axos Financial with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Nomura Holdings.
Diversification Opportunities for Axos Financial and Nomura Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and Nomura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial 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 Axos Financial 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 Axos Financial 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 Axos Financial i.e., Axos Financial and Nomura Holdings go up and down completely randomly.
Pair Corralation between Axos Financial and Nomura Holdings
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.58 times more return on investment than Nomura Holdings. However, Axos Financial is 1.58 times more volatile than Nomura Holdings ADR. It trades about 0.07 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.07 per unit of risk. If you would invest 3,853 in Axos Financial on August 27, 2024 and sell it today you would earn a total of 4,613 from holding Axos Financial or generate 119.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. Nomura Holdings ADR
Performance |
| Timeline |
| Axos Financial |
| Nomura Holdings ADR |
Axos Financial and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Nomura Holdings
The main advantage of trading using opposite Axos Financial and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial 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.| Axos Financial vs. Fifth Third Bancorp | Axos Financial vs. Zions Bancorporation | Axos Financial vs. Huntington Bancshares Incorporated | Axos Financial vs. PNC Financial Services |
| Nomura Holdings vs. Visa Class A | Nomura Holdings vs. Diamond Hill Investment | Nomura Holdings vs. Distoken Acquisition | Nomura Holdings vs. AllianceBernstein Holding LP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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