Correlation Between Micron Technology and Nomura Holdings

Can any of the company-specific risk be diversified away by investing in both Micron 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 Micron 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 Micron Technology and Nomura Holdings, you can compare the effects of market volatilities on Micron 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 Micron Technology with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Nomura Holdings.

Diversification Opportunities for Micron Technology and Nomura Holdings

-0.52

Correlation Coefficient

Micron Technology  Nomura Holdings

Excellent diversification

The 3 months correlation between Micron and Nomura is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and Micron 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Nomura Holdings go up and down completely randomly.

Pair Corralation between Micron Technology and Nomura Holdings

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.97 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, Micron Technology is 1.67 times less risky than Nomura Holdings. It trades about 0.05 of its potential returns per unit of risk. Nomura Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  321.00  in Nomura Holdings on September 28, 2024 and sell it today you would earn a total of  253.00  from holding Nomura Holdings or generate 78.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.81%
Values	Daily Returns

Micron Technology  vs.  Nomura Holdings

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Nomura Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Nomura Holdings

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

The idea behind Micron Technology and Nomura Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.