Correlation Between Nomura Holdings and Mitsubishi UFJ

Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Mitsubishi UFJ 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 Mitsubishi UFJ 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 Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Nomura Holdings and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Mitsubishi UFJ.

Diversification Opportunities for Nomura Holdings and Mitsubishi UFJ

0.8

Correlation Coefficient

Nomura Holdings  Mitsubishi UFJ

Very poor diversification

The 3 months correlation between Nomura and Mitsubishi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Nomura Holdings and Mitsubishi UFJ

Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 1.05 times more return on investment than Mitsubishi UFJ. However, Nomura Holdings is 1.05 times more volatile than Mitsubishi UFJ Financial. It trades about 0.19 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.13 per unit of risk. If you would invest  556.00  in Nomura Holdings ADR on May 8, 2025 and sell it today you would earn a total of  122.00  from holding Nomura Holdings ADR or generate 21.94% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Mitsubishi UFJ Financial

Nomura Holdings ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Nomura Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mitsubishi UFJ reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Holdings and Mitsubishi UFJ

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

The idea behind Nomura Holdings ADR and Mitsubishi UFJ Financial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.