Correlation Between Nu Holdings and Banco De

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

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

Diversification Opportunities for Nu Holdings and Banco De

0.35

Correlation Coefficient

Nu Holdings  Banco De

Weak diversification

The 3 months correlation between Nu Holdings and Banco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile and Nu 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 Nu Holdings are associated (or correlated) with Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of Nu Holdings i.e., Nu Holdings and Banco De go up and down completely randomly.

Pair Corralation between Nu Holdings and Banco De

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Banco De. In addition to that, Nu Holdings is 3.27 times more volatile than Banco De Chile. It trades about -0.47 of its total potential returns per unit of risk. Banco De Chile is currently generating about -0.05 per unit of volatility. If you would invest  2,282  in Banco De Chile on September 24, 2024 and sell it today you would lose (26.00) from holding Banco De Chile or give up 1.14% of portfolio value over 90 days.

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

Nu Holdings  vs.  Banco De Chile

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Banco De Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco De Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Nu Holdings and Banco De

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

The idea behind Nu Holdings and Banco De Chile 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..