Correlation Between Banco Santander and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Santander 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 Santander Brasil and Nu Holdings, you can compare the effects of market volatilities on Banco Santander 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 Santander with a short position of Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and Nu Holdings.
Diversification Opportunities for Banco Santander and Nu Holdings
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Banco and Nu Holdings is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings and Banco Santander 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 Santander Brasil 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 Santander i.e., Banco Santander and Nu Holdings go up and down completely randomly.
Pair Corralation between Banco Santander and Nu Holdings
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the Nu Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.46 times less risky than Nu Holdings. The stock trades about -0.22 of its potential returns per unit of risk. The Nu Holdings is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,548 in Nu Holdings on August 28, 2024 and sell it today you would lose (125.00) from holding Nu Holdings or give up 8.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. Nu Holdings
Performance |
| Timeline |
| Banco Santander Brasil |
| Nu Holdings |
Banco Santander and Nu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and Nu Holdings
The main advantage of trading using opposite Banco Santander and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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 Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
| Nu Holdings vs. Banco Santander Brasil | Nu Holdings vs. CrossFirst Bankshares | Nu Holdings vs. Banco Bradesco SA | Nu Holdings vs. CF Bankshares |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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