Correlation Between Nu Holdings and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Bank of Montreal 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 Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Bank of Montreal, you can compare the effects of market volatilities on Nu Holdings and Bank of Montreal 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 Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Bank of Montreal.
Diversification Opportunities for Nu Holdings and Bank of Montreal
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nu Holdings and Bank is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal 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 Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of Nu Holdings i.e., Nu Holdings and Bank of Montreal go up and down completely randomly.
Pair Corralation between Nu Holdings and Bank of Montreal
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.72 times more return on investment than Bank of Montreal. However, Nu Holdings is 1.72 times more volatile than Bank of Montreal. It trades about 0.05 of its potential returns per unit of risk. Bank of Montreal is currently generating about 0.02 per unit of risk. If you would invest 1,218 in Nu Holdings on August 23, 2024 and sell it today you would earn a total of 132.50 from holding Nu Holdings or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. Bank of Montreal
Performance |
| Timeline |
| Nu Holdings |
| Bank of Montreal |
Nu Holdings and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Bank of Montreal
The main advantage of trading using opposite Nu Holdings and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| Nu Holdings vs. Waterstone Financial | Nu Holdings vs. Mid Penn Bancorp | Nu Holdings vs. ST Bancorp | Nu Holdings vs. Republic Bancorp |
| Bank of Montreal vs. Wells Fargo | Bank of Montreal vs. Toronto Dominion Bank | Bank of Montreal vs. Royal Bank of | Bank of Montreal vs. JPMorgan Chase Co |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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