Correlation Between Mizuho Financial and Nexteer Automotive
Can any of the company-specific risk be diversified away by investing in both Mizuho Financial and Nexteer Automotive 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 Mizuho Financial and Nexteer Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mizuho Financial Group and Nexteer Automotive Group, you can compare the effects of market volatilities on Mizuho Financial and Nexteer Automotive 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 Mizuho Financial with a short position of Nexteer Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizuho Financial and Nexteer Automotive.
Diversification Opportunities for Mizuho Financial and Nexteer Automotive
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mizuho and Nexteer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and Nexteer Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexteer Automotive and Mizuho Financial 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 Mizuho Financial Group are associated (or correlated) with Nexteer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexteer Automotive has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and Nexteer Automotive go up and down completely randomly.
Pair Corralation between Mizuho Financial and Nexteer Automotive
Assuming the 90 days horizon Mizuho Financial is expected to generate 1.61 times less return on investment than Nexteer Automotive. But when comparing it to its historical volatility, Mizuho Financial Group is 1.4 times less risky than Nexteer Automotive. It trades about 0.21 of its potential returns per unit of risk. Nexteer Automotive Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Nexteer Automotive Group on November 29, 2024 and sell it today you would earn a total of 7.00 from holding Nexteer Automotive Group or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Mizuho Financial Group vs. Nexteer Automotive Group
Performance |
| Timeline |
| Mizuho Financial |
| Nexteer Automotive |
Mizuho Financial and Nexteer Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mizuho Financial and Nexteer Automotive
The main advantage of trading using opposite Mizuho Financial and Nexteer Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizuho Financial position performs unexpectedly, Nexteer Automotive 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 Nexteer Automotive will offset losses from the drop in Nexteer Automotive's long position.| Mizuho Financial vs. Banco De Chile | Mizuho Financial vs. Banco Santander Brasil | Mizuho Financial vs. CrossFirst Bankshares | Mizuho Financial vs. Banco Bradesco SA |
| Nexteer Automotive vs. Adient PLC | Nexteer Automotive vs. Holley Inc | Nexteer Automotive vs. ECARX Holdings Class | Nexteer Automotive vs. Autoliv |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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