Correlation Between Nomura Holdings and BURBERRY GROUP

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

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

Diversification Opportunities for Nomura Holdings and BURBERRY GROUP

0.8

Correlation Coefficient

Nomura Holdings  BURBERRY GROUP

Very poor diversification

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

Pair Corralation between Nomura Holdings and BURBERRY GROUP

Assuming the 90 days horizon Nomura Holdings is expected to generate 4.89 times less return on investment than BURBERRY GROUP. But when comparing it to its historical volatility, Nomura Holdings is 1.97 times less risky than BURBERRY GROUP. It trades about 0.12 of its potential returns per unit of risk. BURBERRY GROUP ADR is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  815.00  in BURBERRY GROUP ADR on April 25, 2025 and sell it today you would earn a total of  655.00  from holding BURBERRY GROUP ADR or generate 80.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Nomura Holdings  vs.  BURBERRY GROUP ADR

Nomura Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nomura Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

BURBERRY GROUP ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BURBERRY GROUP ADR are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BURBERRY GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Holdings and BURBERRY GROUP

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

The idea behind Nomura Holdings and BURBERRY GROUP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.