Correlation Between Morgan Stanley and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Nomura Holdings ADR, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Nomura Holdings.
Diversification Opportunities for Morgan Stanley and Nomura Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and Nomura is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley i.e., Morgan Stanley and Nomura Holdings go up and down completely randomly.
Pair Corralation between Morgan Stanley and Nomura Holdings
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 0.8 times more return on investment than Nomura Holdings. However, Morgan Stanley is 1.25 times less risky than Nomura Holdings. It trades about 0.13 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.03 per unit of risk. If you would invest 8,459 in Morgan Stanley on August 29, 2024 and sell it today you would earn a total of 4,601 from holding Morgan Stanley or generate 54.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Nomura Holdings ADR
Performance |
| Timeline |
| Morgan Stanley |
| Nomura Holdings ADR |
Morgan Stanley and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Nomura Holdings
The main advantage of trading using opposite Morgan Stanley and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Blockchain |
| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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