Correlation Between Natwest Group and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Natwest Group and Nomura Holdings 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 Natwest Group and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natwest Group PLC and Nomura Holdings ADR, you can compare the effects of market volatilities on Natwest Group and Nomura Holdings 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 Natwest Group with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natwest Group and Nomura Holdings.
Diversification Opportunities for Natwest Group and Nomura Holdings
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Natwest and Nomura is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Natwest Group PLC and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR and Natwest Group 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 Natwest Group PLC are associated (or correlated) with Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Natwest Group i.e., Natwest Group and Nomura Holdings go up and down completely randomly.
Pair Corralation between Natwest Group and Nomura Holdings
Considering the 90-day investment horizon Natwest Group is expected to generate 3.3 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, Natwest Group PLC is 1.19 times less risky than Nomura Holdings. It trades about 0.13 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 518.00 in Nomura Holdings ADR on August 31, 2024 and sell it today you would earn a total of 75.00 from holding Nomura Holdings ADR or generate 14.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natwest Group PLC vs. Nomura Holdings ADR
Performance |
| Timeline |
| Natwest Group PLC |
| Nomura Holdings ADR |
Natwest Group and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natwest Group and Nomura Holdings
The main advantage of trading using opposite Natwest Group and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natwest Group position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.| Natwest Group vs. ING Group NV | Natwest Group vs. HSBC Holdings PLC | Natwest Group vs. Banco Santander SA | Natwest Group vs. UBS Group AG |
| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |