Correlation Between Banco Bradesco and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco and Nu 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 Banco Bradesco and Nu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco SA and Nu Holdings, you can compare the effects of market volatilities on Banco Bradesco and Nu 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 Banco Bradesco with a short position of Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and Nu Holdings.
Diversification Opportunities for Banco Bradesco and Nu Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and Nu Holdings is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings and Banco Bradesco 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 Banco Bradesco SA are associated (or correlated) with Nu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Holdings has no effect on the direction of Banco Bradesco i.e., Banco Bradesco and Nu Holdings go up and down completely randomly.
Pair Corralation between Banco Bradesco and Nu Holdings
Considering the 90-day investment horizon Banco Bradesco is expected to generate 1.64 times less return on investment than Nu Holdings. In addition to that, Banco Bradesco is 1.16 times more volatile than Nu Holdings. It trades about 0.21 of its total potential returns per unit of risk. Nu Holdings is currently generating about 0.41 per unit of volatility. If you would invest 1,153 in Nu Holdings on November 18, 2024 and sell it today you would earn a total of 217.00 from holding Nu Holdings or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. Nu Holdings
Performance |
| Timeline |
| Banco Bradesco SA |
| Nu Holdings |
Banco Bradesco and Nu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and Nu Holdings
The main advantage of trading using opposite Banco Bradesco and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco position performs unexpectedly, Nu 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 Nu Holdings will offset losses from the drop in Nu Holdings' long position.| Banco Bradesco vs. Banco Santander Brasil | Banco Bradesco vs. Banco Macro SA | Banco Bradesco vs. Lloyds Banking Group | Banco Bradesco vs. Grupo Financiero Galicia |
| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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