Correlation Between Nomura Holdings and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Freedom Holding 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 Nomura Holdings and Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings ADR and Freedom Holding Corp, you can compare the effects of market volatilities on Nomura Holdings and Freedom Holding 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 Nomura Holdings with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Freedom Holding.
Diversification Opportunities for Nomura Holdings and Freedom Holding
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nomura and Freedom is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp and Nomura Holdings 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 Nomura Holdings ADR are associated (or correlated) with Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Freedom Holding go up and down completely randomly.
Pair Corralation between Nomura Holdings and Freedom Holding
Considering the 90-day investment horizon Nomura Holdings is expected to generate 1.25 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Nomura Holdings ADR is 1.46 times less risky than Freedom Holding. It trades about 0.16 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12,892 in Freedom Holding Corp on October 22, 2024 and sell it today you would earn a total of 571.00 from holding Freedom Holding Corp or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomura Holdings ADR vs. Freedom Holding Corp
Performance |
| Timeline |
| Nomura Holdings ADR |
| Freedom Holding Corp |
Nomura Holdings and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and Freedom Holding
The main advantage of trading using opposite Nomura Holdings and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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