Correlation Between Xp and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both Xp 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 Xp and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Nomura Holdings, you can compare the effects of market volatilities on Xp 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 Xp with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Nomura Holdings.
Diversification Opportunities for Xp and Nomura Holdings
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Nomura is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and Xp 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 Xp Inc 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 Xp i.e., Xp and Nomura Holdings go up and down completely randomly.
Pair Corralation between Xp and Nomura Holdings
Assuming the 90 days trading horizon Xp is expected to generate 5.14 times less return on investment than Nomura Holdings. In addition to that, Xp is 1.02 times more volatile than Nomura Holdings. It trades about 0.01 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.07 per unit of volatility. If you would invest 2,114 in Nomura Holdings on September 1, 2024 and sell it today you would earn a total of 1,502 from holding Nomura Holdings or generate 71.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.4% |
| Values | Daily Returns |
Xp Inc vs. Nomura Holdings
Performance |
| Timeline |
| Xp Inc |
| Nomura Holdings |
Xp and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Nomura Holdings
The main advantage of trading using opposite Xp and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp 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.| Xp vs. G2D Investments | Xp vs. Warner Music Group | Xp vs. Fidelity National Information | Xp vs. Verizon Communications |
| 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 Valuation module to check real value of public entities based on technical and fundamental data.
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