Correlation Between HUNTINGTON and Nomura Holdings

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

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

Diversification Opportunities for HUNTINGTON and Nomura Holdings

-0.42

Correlation Coefficient

HUNTINGTON  Nomura Holdings

Very good diversification

The 3 months correlation between HUNTINGTON and Nomura is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HUNTINGTON BANCSHARES INC 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 HUNTINGTON 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 HUNTINGTON BANCSHARES INC 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 HUNTINGTON i.e., HUNTINGTON and Nomura Holdings go up and down completely randomly.

Pair Corralation between HUNTINGTON and Nomura Holdings

Assuming the 90 days trading horizon HUNTINGTON BANCSHARES INC is expected to generate 0.89 times more return on investment than Nomura Holdings. However, HUNTINGTON BANCSHARES INC is 1.12 times less risky than Nomura Holdings. It trades about -0.19 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about -0.18 per unit of risk. If you would invest  8,857  in HUNTINGTON BANCSHARES INC on September 24, 2024 and sell it today you would lose (402.00) from holding HUNTINGTON BANCSHARES INC or give up 4.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

HUNTINGTON BANCSHARES INC  vs.  Nomura Holdings ADR

HUNTINGTON BANCSHARES INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nomura Holdings ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 3 (%) 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 HUNTINGTON and Nomura Holdings

The main advantage of trading using opposite HUNTINGTON and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUNTINGTON 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 HUNTINGTON BANCSHARES INC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.