Correlation Between Stifel Financial and Nomura Holdings

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

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

Diversification Opportunities for Stifel Financial and Nomura Holdings

-0.43

Correlation Coefficient

Stifel Financial  Nomura Holdings

Very good diversification

The 3 months correlation between Stifel and Nomura is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp 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 Stifel Financial 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 Stifel Financial Corp 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 Stifel Financial i.e., Stifel Financial and Nomura Holdings go up and down completely randomly.

Pair Corralation between Stifel Financial and Nomura Holdings

Assuming the 90 days horizon Stifel Financial is expected to generate 25.61 times less return on investment than Nomura Holdings. But when comparing it to its historical volatility, Stifel Financial Corp is 2.68 times less risky than Nomura Holdings. It trades about 0.0 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  579.00  in Nomura Holdings ADR on August 31, 2024 and sell it today you would earn a total of  14.00  from holding Nomura Holdings ADR or generate 2.42% return on investment over 90 days.

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

Stifel Financial Corp  vs.  Nomura Holdings ADR

Stifel Financial Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Nomura Holdings ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Stifel Financial and Nomura Holdings

The main advantage of trading using opposite Stifel Financial and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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 Stifel Financial Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.