Correlation Between Nomura Holdings and British American
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and British American 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 British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings and British American Tobacco, you can compare the effects of market volatilities on Nomura Holdings and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and British American.
Diversification Opportunities for Nomura Holdings and British American
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nomura and British is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and British American go up and down completely randomly.
Pair Corralation between Nomura Holdings and British American
Assuming the 90 days horizon Nomura Holdings is expected to generate 1.76 times more return on investment than British American. However, Nomura Holdings is 1.76 times more volatile than British American Tobacco. It trades about 0.14 of its potential returns per unit of risk. British American Tobacco is currently generating about -0.1 per unit of risk. If you would invest 552.00 in Nomura Holdings on October 20, 2024 and sell it today you would earn a total of 20.00 from holding Nomura Holdings or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomura Holdings vs. British American Tobacco
Performance |
| Timeline |
| Nomura Holdings |
| British American Tobacco |
Nomura Holdings and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and British American
The main advantage of trading using opposite Nomura Holdings and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Nomura Holdings vs. VELA TECHNOLPLC LS 0001 | Nomura Holdings vs. AAC TECHNOLOGHLDGADR | Nomura Holdings vs. Semiconductor Manufacturing International | Nomura Holdings vs. Magnachip Semiconductor |
| British American vs. GigaMedia | British American vs. PENN NATL GAMING | British American vs. Tencent Music Entertainment | British American vs. Urban Outfitters |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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