Correlation Between Moelis and Nomura Holdings

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

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

Diversification Opportunities for Moelis and Nomura Holdings

0.45

Correlation Coefficient

Moelis  Nomura Holdings

Very weak diversification

The 3 months correlation between Moelis and Nomura is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co 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 Moelis 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 Moelis Co 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 Moelis i.e., Moelis and Nomura Holdings go up and down completely randomly.

Pair Corralation between Moelis and Nomura Holdings

Allowing for the 90-day total investment horizon Moelis Co is expected to under-perform the Nomura Holdings. In addition to that, Moelis is 1.01 times more volatile than Nomura Holdings ADR. It trades about -0.15 of its total potential returns per unit of risk. Nomura Holdings ADR is currently generating about -0.01 per unit of volatility. If you would invest  558.00  in Nomura Holdings ADR on January 12, 2025 and sell it today you would lose (27.00) from holding Nomura Holdings ADR or give up 4.84% of portfolio value over 90 days.

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

Moelis Co  vs.  Nomura Holdings ADR

Moelis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moelis Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nomura Holdings ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nomura Holdings ADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Moelis and Nomura Holdings

The main advantage of trading using opposite Moelis and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis 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 Moelis Co 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.