Correlation Between Legrand SA and Nomura Research
Can any of the company-specific risk be diversified away by investing in both Legrand SA and Nomura Research 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 Legrand SA and Nomura Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA ADR and Nomura Research Institute, you can compare the effects of market volatilities on Legrand SA and Nomura Research 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 Legrand SA with a short position of Nomura Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Nomura Research.
Diversification Opportunities for Legrand SA and Nomura Research
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legrand and Nomura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA ADR and Nomura Research Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Research Institute and Legrand SA 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 Legrand SA ADR are associated (or correlated) with Nomura Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Research Institute has no effect on the direction of Legrand SA i.e., Legrand SA and Nomura Research go up and down completely randomly.
Pair Corralation between Legrand SA and Nomura Research
Assuming the 90 days horizon Legrand SA is expected to generate 1.18 times less return on investment than Nomura Research. But when comparing it to its historical volatility, Legrand SA ADR is 1.29 times less risky than Nomura Research. It trades about 0.05 of its potential returns per unit of risk. Nomura Research Institute is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,493 in Nomura Research Institute on September 19, 2024 and sell it today you would earn a total of 464.00 from holding Nomura Research Institute or generate 18.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA ADR vs. Nomura Research Institute
Performance |
| Timeline |
| Legrand SA ADR |
| Nomura Research Institute |
Legrand SA and Nomura Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Nomura Research
The main advantage of trading using opposite Legrand SA and Nomura Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA position performs unexpectedly, Nomura Research 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 Research will offset losses from the drop in Nomura Research's long position.| Legrand SA vs. FREYR Battery SA | Legrand SA vs. nVent Electric PLC | Legrand SA vs. Hubbell | Legrand SA vs. Advanced Energy Industries |
| Nomura Research vs. The Hackett Group | Nomura Research vs. Genpact Limited | Nomura Research vs. Grid Dynamics Holdings | Nomura Research vs. ASGN Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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