Correlation Between Spotify Technology and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Nomura Holdings, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Nomura Holdings.
Diversification Opportunities for Spotify Technology and Nomura Holdings
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Spotify and Nomura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and Spotify Technology 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 Spotify Technology SA 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 has no effect on the direction of Spotify Technology i.e., Spotify Technology and Nomura Holdings go up and down completely randomly.
Pair Corralation between Spotify Technology and Nomura Holdings
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.44 times more return on investment than Nomura Holdings. However, Spotify Technology is 1.44 times more volatile than Nomura Holdings. It trades about 0.38 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.38 per unit of risk. If you would invest 56,155 in Spotify Technology SA on September 1, 2024 and sell it today you would earn a total of 15,604 from holding Spotify Technology SA or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Spotify Technology SA vs. Nomura Holdings
Performance |
| Timeline |
| Spotify Technology |
| Nomura Holdings |
Spotify Technology and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Nomura Holdings
The main advantage of trading using opposite Spotify Technology and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. New Oriental Education | Spotify Technology vs. Electronic Arts | Spotify Technology vs. Unifique Telecomunicaes SA | Spotify Technology vs. Multilaser Industrial SA |
| Nomura Holdings vs. Prudential Financial | Nomura Holdings vs. United States Steel | Nomura Holdings vs. Broadcom | Nomura Holdings vs. Monster Beverage |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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