Correlation Between Mizuho Financial and Xanadu Mines

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

By analyzing existing cross correlation between Mizuho Financial Group and Xanadu Mines Limited, you can compare the effects of market volatilities on Mizuho Financial and Xanadu Mines 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 Mizuho Financial with a short position of Xanadu Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mizuho Financial and Xanadu Mines.

Diversification Opportunities for Mizuho Financial and Xanadu Mines

-0.43

Correlation Coefficient

Mizuho Financial  Xanadu Mines

Very good diversification

The 3 months correlation between Mizuho and Xanadu is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group and Xanadu Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xanadu Mines Limited and Mizuho 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 Mizuho Financial Group are associated (or correlated) with Xanadu Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xanadu Mines Limited has no effect on the direction of Mizuho Financial i.e., Mizuho Financial and Xanadu Mines go up and down completely randomly.

Pair Corralation between Mizuho Financial and Xanadu Mines

Considering the 90-day investment horizon Mizuho Financial Group is expected to generate 3.18 times more return on investment than Xanadu Mines. However, Mizuho Financial is 3.18 times more volatile than Xanadu Mines Limited. It trades about 0.1 of its potential returns per unit of risk. Xanadu Mines Limited is currently generating about -0.11 per unit of risk. If you would invest  342.00  in Mizuho Financial Group on February 1, 2024 and sell it today you would earn a total of  45.00  from holding Mizuho Financial Group or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.81%
Values	Daily Returns

Mizuho Financial Group  vs.  Xanadu Mines Limited

Mizuho Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mizuho Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Xanadu Mines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xanadu Mines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xanadu Mines is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mizuho Financial and Xanadu Mines

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

The idea behind Mizuho Financial Group and Xanadu Mines Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.