Correlation Between CrossFirst Bankshares and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both CrossFirst Bankshares 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 CrossFirst Bankshares and Nu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CrossFirst Bankshares and Nu Holdings, you can compare the effects of market volatilities on CrossFirst Bankshares 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 CrossFirst Bankshares with a short position of Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrossFirst Bankshares and Nu Holdings.
Diversification Opportunities for CrossFirst Bankshares and Nu Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CrossFirst and Nu Holdings is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings and CrossFirst Bankshares 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 CrossFirst Bankshares 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 CrossFirst Bankshares i.e., CrossFirst Bankshares and Nu Holdings go up and down completely randomly.
Pair Corralation between CrossFirst Bankshares and Nu Holdings
Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 3.35 times less return on investment than Nu Holdings. But when comparing it to its historical volatility, CrossFirst Bankshares is 1.13 times less risky than Nu Holdings. It trades about 0.04 of its potential returns per unit of risk. Nu Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 402.00 in Nu Holdings on August 31, 2024 and sell it today you would earn a total of 951.00 from holding Nu Holdings or generate 236.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CrossFirst Bankshares vs. Nu Holdings
Performance |
| Timeline |
| CrossFirst Bankshares |
| Nu Holdings |
CrossFirst Bankshares and Nu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CrossFirst Bankshares and Nu Holdings
The main advantage of trading using opposite CrossFirst Bankshares and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrossFirst Bankshares 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.| CrossFirst Bankshares vs. Home Bancorp | CrossFirst Bankshares vs. Great Southern Bancorp | CrossFirst Bankshares vs. Finward Bancorp | CrossFirst Bankshares vs. Community West Bancshares |
| Nu Holdings vs. KeyCorp | Nu Holdings vs. Comerica | Nu Holdings vs. First Horizon National | Nu Holdings vs. Western Alliance Bancorporation |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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