Correlation Between Nomura Holdings and Welltower

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

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

Diversification Opportunities for Nomura Holdings and Welltower

0.57

Correlation Coefficient

Nomura Holdings  Welltower

Very weak diversification

The 3 months correlation between Nomura and Welltower is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 ADR are associated (or correlated) with Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Welltower go up and down completely randomly.

Pair Corralation between Nomura Holdings and Welltower

Considering the 90-day investment horizon Nomura Holdings ADR is expected to under-perform the Welltower. In addition to that, Nomura Holdings is 1.32 times more volatile than Welltower. It trades about -0.19 of its total potential returns per unit of risk. Welltower is currently generating about 0.2 per unit of volatility. If you would invest  9,199  in Welltower on January 31, 2024 and sell it today you would earn a total of  379.00  from holding Welltower or generate 4.12% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Welltower

Nomura Holdings ADR

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 1 (%) 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Welltower

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Welltower may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Nomura Holdings and Welltower

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

The idea behind Nomura Holdings ADR and Welltower 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.