Correlation Between Nomura Holdings and Dollar General

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

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

Diversification Opportunities for Nomura Holdings and Dollar General

0.16

Correlation Coefficient

Nomura Holdings  Dollar General

Average diversification

The 3 months correlation between Nomura and Dollar is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Dollar General go up and down completely randomly.

Pair Corralation between Nomura Holdings and Dollar General

Assuming the 90 days trading horizon Nomura Holdings is expected to generate 0.74 times more return on investment than Dollar General. However, Nomura Holdings is 1.34 times less risky than Dollar General. It trades about 0.11 of its potential returns per unit of risk. Dollar General is currently generating about -0.08 per unit of risk. If you would invest  2,989  in Nomura Holdings on March 13, 2024 and sell it today you would earn a total of  329.00  from holding Nomura Holdings or generate 11.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nomura Holdings  vs.  Dollar General

Nomura Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Dollar General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dollar General has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nomura Holdings and Dollar General

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

The idea behind Nomura Holdings and Dollar General 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.