Correlation Between Prospect Capital and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Prospect Capital 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 Prospect Capital and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and Nomura Holdings ADR, you can compare the effects of market volatilities on Prospect Capital 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 Prospect Capital with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Nomura Holdings.
Diversification Opportunities for Prospect Capital and Nomura Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prospect and Nomura is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital 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 Prospect Capital 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 Prospect Capital 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 Prospect Capital i.e., Prospect Capital and Nomura Holdings go up and down completely randomly.
Pair Corralation between Prospect Capital and Nomura Holdings
Assuming the 90 days trading horizon Prospect Capital is expected to generate 0.84 times more return on investment than Nomura Holdings. However, Prospect Capital is 1.19 times less risky than Nomura Holdings. It trades about 0.06 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.01 per unit of risk. If you would invest 1,670 in Prospect Capital on August 24, 2024 and sell it today you would earn a total of 235.00 from holding Prospect Capital or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospect Capital vs. Nomura Holdings ADR
Performance |
| Timeline |
| Prospect Capital |
| Nomura Holdings ADR |
Prospect Capital and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospect Capital and Nomura Holdings
The main advantage of trading using opposite Prospect Capital and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital 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.| Prospect Capital vs. PennyMac Mortgage Investment | Prospect Capital vs. SiriusPoint | Prospect Capital vs. Telephone and Data | Prospect Capital vs. ARMOUR Residential REIT |
| Nomura Holdings vs. SCOR PK | Nomura Holdings vs. Aquagold International | Nomura Holdings vs. Small Cap Core | Nomura Holdings vs. Morningstar Unconstrained Allocation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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