Correlation Between Nomura Holdings and Morgan Stanley

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

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

Diversification Opportunities for Nomura Holdings and Morgan Stanley

0.45

Correlation Coefficient

Nomura Holdings  Morgan Stanley

Very weak diversification

The 3 months correlation between Nomura and Morgan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and Nomura Holdings 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 Nomura Holdings are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Morgan Stanley go up and down completely randomly.

Pair Corralation between Nomura Holdings and Morgan Stanley

Assuming the 90 days horizon Nomura Holdings is expected to generate 27.79 times more return on investment than Morgan Stanley. However, Nomura Holdings is 27.79 times more volatile than Morgan Stanley. It trades about 0.08 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.02 per unit of risk. If you would invest  493.00  in Nomura Holdings on September 29, 2024 and sell it today you would earn a total of  81.00  from holding Nomura Holdings or generate 16.43% return on investment over 90 days.

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

Nomura Holdings  vs.  Morgan Stanley

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.

Morgan Stanley

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Morgan Stanley is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nomura Holdings and Morgan Stanley

The main advantage of trading using opposite Nomura Holdings and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.

The idea behind Nomura Holdings and Morgan Stanley 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.