Correlation Between Nomura Holdings and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Cognizant Technology 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 Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings and Cognizant Technology Solutions, you can compare the effects of market volatilities on Nomura Holdings and Cognizant Technology 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 Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Cognizant Technology.
Diversification Opportunities for Nomura Holdings and Cognizant Technology
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nomura and Cognizant is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology 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 Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Cognizant Technology go up and down completely randomly.
Pair Corralation between Nomura Holdings and Cognizant Technology
Assuming the 90 days trading horizon Nomura Holdings is expected to generate 14.26 times more return on investment than Cognizant Technology. However, Nomura Holdings is 14.26 times more volatile than Cognizant Technology Solutions. It trades about 0.34 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.3 per unit of risk. If you would invest 3,102 in Nomura Holdings on September 2, 2024 and sell it today you would earn a total of 514.00 from holding Nomura Holdings or generate 16.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomura Holdings vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Nomura Holdings |
| Cognizant Technology |
Nomura Holdings and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and Cognizant Technology
The main advantage of trading using opposite Nomura Holdings and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Nomura Holdings vs. Cognizant Technology Solutions | Nomura Holdings vs. Marvell Technology | Nomura Holdings vs. BIONTECH SE DRN | Nomura Holdings vs. Take Two Interactive Software |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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