Correlation Between Nu Holdings and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Barclays PLC ADR, you can compare the effects of market volatilities on Nu Holdings and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Barclays PLC.
Diversification Opportunities for Nu Holdings and Barclays PLC
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nu Holdings and Barclays is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Nu Holdings i.e., Nu Holdings and Barclays PLC go up and down completely randomly.
Pair Corralation between Nu Holdings and Barclays PLC
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Barclays PLC. In addition to that, Nu Holdings is 1.2 times more volatile than Barclays PLC ADR. It trades about -0.02 of its total potential returns per unit of risk. Barclays PLC ADR is currently generating about 0.05 per unit of volatility. If you would invest 1,221 in Barclays PLC ADR on August 26, 2024 and sell it today you would earn a total of 76.00 from holding Barclays PLC ADR or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. Barclays PLC ADR
Performance |
| Timeline |
| Nu Holdings |
| Barclays PLC ADR |
Nu Holdings and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Barclays PLC
The main advantage of trading using opposite Nu Holdings and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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