Correlation Between National Australia and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both National Australia 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 National Australia and Nu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and Nu Holdings, you can compare the effects of market volatilities on National Australia 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 National Australia with a short position of Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Nu Holdings.
Diversification Opportunities for National Australia and Nu Holdings
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Nu Holdings is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings and National Australia 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 National Australia Bank 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 National Australia i.e., National Australia and Nu Holdings go up and down completely randomly.
Pair Corralation between National Australia and Nu Holdings
Assuming the 90 days horizon National Australia Bank is expected to generate 0.5 times more return on investment than Nu Holdings. However, National Australia Bank is 2.02 times less risky than Nu Holdings. It trades about 0.12 of its potential returns per unit of risk. Nu Holdings is currently generating about -0.14 per unit of risk. If you would invest 1,253 in National Australia Bank on August 24, 2024 and sell it today you would earn a total of 46.00 from holding National Australia Bank or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Nu Holdings
Performance |
| Timeline |
| National Australia Bank |
| Nu Holdings |
National Australia and Nu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Nu Holdings
The main advantage of trading using opposite National Australia and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia 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.| National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings | National Australia vs. Bank of America |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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