Correlation Between VersaBank and Mizuho Financial

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

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

Diversification Opportunities for VersaBank and Mizuho Financial

-0.49

Correlation Coefficient

VersaBank  Mizuho Financial

Very good diversification

The 3 months correlation between VersaBank and Mizuho is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial and VersaBank 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 VersaBank are associated (or correlated) with Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of VersaBank i.e., VersaBank and Mizuho Financial go up and down completely randomly.

Pair Corralation between VersaBank and Mizuho Financial

Given the investment horizon of 90 days VersaBank is expected to under-perform the Mizuho Financial. In addition to that, VersaBank is 1.43 times more volatile than Mizuho Financial Group. It trades about -0.09 of its total potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.03 per unit of volatility. If you would invest  388.00  in Mizuho Financial Group on February 4, 2024 and sell it today you would earn a total of  3.00  from holding Mizuho Financial Group or generate 0.77% return on investment over 90 days.

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

VersaBank  vs.  Mizuho Financial Group

VersaBank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mizuho Financial

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mizuho Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VersaBank and Mizuho Financial

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

The idea behind VersaBank and Mizuho Financial Group 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.