Correlation Between Orix Corp and Mizuho Financial

Can any of the company-specific risk be diversified away by investing in both Orix Corp 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 Orix Corp and Mizuho Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orix Corp Ads and Mizuho Financial Group, you can compare the effects of market volatilities on Orix Corp 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 Orix Corp with a short position of Mizuho Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Mizuho Financial.

Diversification Opportunities for Orix Corp and Mizuho Financial

-0.16

Correlation Coefficient

Orix Corp  Mizuho Financial

Good diversification

The 3 months correlation between Orix and Mizuho is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial and Orix Corp 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and Mizuho Financial go up and down completely randomly.

Pair Corralation between Orix Corp and Mizuho Financial

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Mizuho Financial. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 1.31 times less risky than Mizuho Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Mizuho Financial Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  418.00  in Mizuho Financial Group on September 28, 2024 and sell it today you would earn a total of  72.00  from holding Mizuho Financial Group or generate 17.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Orix Corp Ads  vs.  Mizuho Financial Group

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mizuho Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and Mizuho Financial

The main advantage of trading using opposite Orix Corp and Mizuho Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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 Orix Corp Ads 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.