Correlation Between State Bank and Mizuho Financial
Can any of the company-specific risk be diversified away by investing in both State Bank and Mizuho Financial 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 State Bank and Mizuho Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Mizuho Financial Group, you can compare the effects of market volatilities on State Bank and Mizuho Financial 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 State Bank with a short position of Mizuho Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Mizuho Financial.
Diversification Opportunities for State Bank and Mizuho Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Mizuho is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial and State Bank 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 State Bank of are associated (or correlated) with Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of State Bank i.e., State Bank and Mizuho Financial go up and down completely randomly.
Pair Corralation between State Bank and Mizuho Financial
Assuming the 90 days horizon State Bank is expected to generate 1.55 times less return on investment than Mizuho Financial. But when comparing it to its historical volatility, State Bank of is 1.14 times less risky than Mizuho Financial. It trades about 0.06 of its potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Mizuho Financial Group on August 29, 2024 and sell it today you would earn a total of 204.00 from holding Mizuho Financial Group or generate 81.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Mizuho Financial Group
Performance |
| Timeline |
| State Bank |
| Mizuho Financial |
State Bank and Mizuho Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Mizuho Financial
The main advantage of trading using opposite State Bank and Mizuho Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Mizuho Financial 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 Mizuho Financial will offset losses from the drop in Mizuho Financial's long position.The idea behind State Bank of and Mizuho Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |