Correlation Between Micron Technology and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Nomura Holdings, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Nomura Holdings.
Diversification Opportunities for Micron Technology and Nomura Holdings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Nomura is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Nomura Holdings go up and down completely randomly.
Pair Corralation between Micron Technology and Nomura Holdings
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.03 times less return on investment than Nomura Holdings. In addition to that, Micron Technology is 1.05 times more volatile than Nomura Holdings. It trades about 0.06 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.07 per unit of volatility. 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 Together |
| Strength | Very Weak |
| Accuracy | 81.16% |
| Values | Daily Returns |
Micron Technology vs. Nomura Holdings
Performance |
| Timeline |
| Micron Technology |
| Nomura Holdings |
Micron Technology and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Nomura Holdings
The main advantage of trading using opposite Micron Technology and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.| Micron Technology vs. GP Investments | Micron Technology vs. Lupatech SA | Micron Technology vs. Marvell Technology | Micron Technology vs. Livetech da Bahia |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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