Correlation Between METISA Metalrgica and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and Nomura Holdings, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Nomura Holdings.
Diversification Opportunities for METISA Metalrgica and Nomura Holdings
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METISA and Nomura is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and Nomura Holdings go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Nomura Holdings
Assuming the 90 days trading horizon METISA Metalrgica is expected to generate 8.76 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, METISA Metalrgica Timboense is 1.08 times less risky than Nomura Holdings. It trades about 0.01 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,938 in Nomura Holdings on August 30, 2024 and sell it today you would earn a total of 1,599 from holding Nomura Holdings or generate 82.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.16% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Nomura Holdings
Performance |
| Timeline |
| METISA Metalrgica |
| Nomura Holdings |
METISA Metalrgica and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Nomura Holdings
The main advantage of trading using opposite METISA Metalrgica and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Recrusul SA | METISA Metalrgica vs. Randon SA Implementos | METISA Metalrgica vs. Electro Ao Altona |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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