Correlation Between Mill City and Nomura Holdings

Can any of the company-specific risk be diversified away by investing in both Mill City 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 Mill City and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mill City Ventures and Nomura Holdings ADR, you can compare the effects of market volatilities on Mill City 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 Mill City with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and Nomura Holdings.

Diversification Opportunities for Mill City and Nomura Holdings

-0.61

Correlation Coefficient

Mill City  Nomura Holdings

Excellent diversification

The 3 months correlation between Mill and Nomura is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures 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 Mill City 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 Mill City Ventures 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 Mill City i.e., Mill City and Nomura Holdings go up and down completely randomly.

Pair Corralation between Mill City and Nomura Holdings

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the Nomura Holdings. In addition to that, Mill City is 1.99 times more volatile than Nomura Holdings ADR. It trades about -0.05 of its total potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.12 per unit of volatility. If you would invest  522.00  in Nomura Holdings ADR on September 29, 2024 and sell it today you would earn a total of  64.00  from holding Nomura Holdings ADR or generate 12.26% return on investment over 90 days.

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

Mill City Ventures  vs.  Nomura Holdings ADR

Mill City Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mill City Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nomura Holdings ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mill City and Nomura Holdings

The main advantage of trading using opposite Mill City and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City 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.

The idea behind Mill City Ventures and Nomura Holdings ADR 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.