Correlation Between Nomura Holdings and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings and The Coca Cola, you can compare the effects of market volatilities on Nomura Holdings and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Coca Cola.
Diversification Opportunities for Nomura Holdings and Coca Cola
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nomura and Coca is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Coca Cola go up and down completely randomly.
Pair Corralation between Nomura Holdings and Coca Cola
Assuming the 90 days trading horizon Nomura Holdings is expected to generate 2.04 times more return on investment than Coca Cola. However, Nomura Holdings is 2.04 times more volatile than The Coca Cola. It trades about 0.06 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.11 per unit of risk. If you would invest 2,929 in Nomura Holdings on August 27, 2024 and sell it today you would earn a total of 601.00 from holding Nomura Holdings or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.84% |
| Values | Daily Returns |
Nomura Holdings vs. The Coca Cola
Performance |
| Timeline |
| Nomura Holdings |
| Coca Cola |
Nomura Holdings and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and Coca Cola
The main advantage of trading using opposite Nomura Holdings and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Nomura Holdings vs. Waste Management | Nomura Holdings vs. METISA Metalrgica Timboense | Nomura Holdings vs. New Oriental Education | Nomura Holdings vs. Micron Technology |
| Coca Cola vs. Monster Beverage | Coca Cola vs. Energisa SA | Coca Cola vs. BTG Pactual Logstica | Coca Cola vs. Plano Plano Desenvolvimento |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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