Correlation Between Chiba Bank and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Chiba Bank 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 Chiba Bank and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and Nomura Holdings, you can compare the effects of market volatilities on Chiba Bank 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 Chiba Bank with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Nomura Holdings.
Diversification Opportunities for Chiba Bank and Nomura Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chiba and Nomura is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and Chiba Bank 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 Chiba Bank 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 has no effect on the direction of Chiba Bank i.e., Chiba Bank and Nomura Holdings go up and down completely randomly.
Pair Corralation between Chiba Bank and Nomura Holdings
Assuming the 90 days horizon Chiba Bank is expected to generate 1.68 times less return on investment than Nomura Holdings. In addition to that, Chiba Bank is 1.15 times more volatile than Nomura Holdings. It trades about 0.26 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.5 per unit of volatility. If you would invest 467.00 in Nomura Holdings on September 1, 2024 and sell it today you would earn a total of 93.00 from holding Nomura Holdings or generate 19.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. Nomura Holdings
Performance |
| Timeline |
| Chiba Bank |
| Nomura Holdings |
Chiba Bank and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and Nomura Holdings
The main advantage of trading using opposite Chiba Bank and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank 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.| Chiba Bank vs. Materialise NV | Chiba Bank vs. Applied Materials | Chiba Bank vs. Martin Marietta Materials | Chiba Bank vs. THRACE PLASTICS |
| Nomura Holdings vs. GOLD ROAD RES | Nomura Holdings vs. Transportadora de Gas | Nomura Holdings vs. Lion Biotechnologies | Nomura Holdings vs. NTG Nordic Transport |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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