Correlation Between Nomura Holdings and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Hanover Insurance 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 Hanover Insurance 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 The Hanover Insurance, you can compare the effects of market volatilities on Nomura Holdings and Hanover Insurance 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Hanover Insurance.
Diversification Opportunities for Nomura Holdings and Hanover Insurance
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nomura and Hanover is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Hanover Insurance go up and down completely randomly.
Pair Corralation between Nomura Holdings and Hanover Insurance
Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 1.39 times more return on investment than Hanover Insurance. However, Nomura Holdings is 1.39 times more volatile than The Hanover Insurance. It trades about 0.06 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest 357.00 in Nomura Holdings ADR on August 30, 2024 and sell it today you would earn a total of 236.00 from holding Nomura Holdings ADR or generate 66.11% 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. The Hanover Insurance
Performance |
| Timeline |
| Nomura Holdings ADR |
| Hanover Insurance |
Nomura Holdings and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and Hanover Insurance
The main advantage of trading using opposite Nomura Holdings and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance'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 |
| Hanover Insurance vs. Axa Equitable Holdings | Hanover Insurance vs. American International Group | Hanover Insurance vs. Arch Capital Group | Hanover Insurance vs. Sun Life Financial |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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