Correlation Between Nu Holdings and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Citizens Financial Group,, you can compare the effects of market volatilities on Nu Holdings and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Citizens Financial.
Diversification Opportunities for Nu Holdings and Citizens Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nu Holdings and Citizens is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of Nu Holdings i.e., Nu Holdings and Citizens Financial go up and down completely randomly.
Pair Corralation between Nu Holdings and Citizens Financial
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Citizens Financial. In addition to that, Nu Holdings is 7.1 times more volatile than Citizens Financial Group,. It trades about -0.12 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about -0.11 per unit of volatility. If you would invest 2,715 in Citizens Financial Group, on August 28, 2024 and sell it today you would lose (25.00) from holding Citizens Financial Group, or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. Citizens Financial Group,
Performance |
| Timeline |
| Nu Holdings |
| Citizens Financial Group, |
Nu Holdings and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Citizens Financial
The main advantage of trading using opposite Nu Holdings and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Nu Holdings vs. Banco Santander Brasil | Nu Holdings vs. CrossFirst Bankshares | Nu Holdings vs. Banco Bradesco SA | Nu Holdings vs. CF Bankshares |
| Citizens Financial vs. Axos Financial | Citizens Financial vs. Byline Bancorp | Citizens Financial vs. KB Financial Group | Citizens Financial vs. Nu Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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