Correlation Between Nomura Holdings and Xp
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Xp 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 Xp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings and Xp Inc, you can compare the effects of market volatilities on Nomura Holdings and Xp 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 Xp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Xp.
Diversification Opportunities for Nomura Holdings and Xp
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nomura and Xp is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Xp go up and down completely randomly.
Pair Corralation between Nomura Holdings and Xp
Assuming the 90 days trading horizon Nomura Holdings is expected to generate 0.99 times more return on investment than Xp. However, Nomura Holdings is 1.01 times less risky than Xp. It trades about 0.34 of its potential returns per unit of risk. Xp Inc is currently generating about -0.42 per unit of risk. If you would invest 3,018 in Nomura Holdings on August 31, 2024 and sell it today you would earn a total of 519.00 from holding Nomura Holdings or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomura Holdings vs. Xp Inc
Performance |
| Timeline |
| Nomura Holdings |
| Xp Inc |
Nomura Holdings and Xp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and Xp
The main advantage of trading using opposite Nomura Holdings and Xp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Xp 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 Xp will offset losses from the drop in Xp's long position.| Nomura Holdings vs. Align Technology | Nomura Holdings vs. Iron Mountain Incorporated | Nomura Holdings vs. United Airlines Holdings | Nomura Holdings vs. Paycom Software |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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