Correlation Between Nomura Holdings and Euronext

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

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

Diversification Opportunities for Nomura Holdings and Euronext

0.68

Correlation Coefficient

Nomura Holdings  Euronext

Poor diversification

The 3 months correlation between Nomura and Euronext is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Euronext NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronext NV 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 Euronext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronext NV has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Euronext go up and down completely randomly.

Pair Corralation between Nomura Holdings and Euronext

Assuming the 90 days horizon Nomura Holdings is expected to generate 1.3 times more return on investment than Euronext. However, Nomura Holdings is 1.3 times more volatile than Euronext NV. It trades about 0.15 of its potential returns per unit of risk. Euronext NV is currently generating about 0.09 per unit of risk. If you would invest  474.00  in Nomura Holdings on September 27, 2024 and sell it today you would earn a total of  74.00  from holding Nomura Holdings or generate 15.61% return on investment over 90 days.

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

Nomura Holdings  vs.  Euronext NV

Nomura Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nomura Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Euronext NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Euronext NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Euronext may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nomura Holdings and Euronext

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

The idea behind Nomura Holdings and Euronext NV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.