Correlation Between Nu Holdings and First Horizon
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and First Horizon 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 First Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and First Horizon, you can compare the effects of market volatilities on Nu Holdings and First Horizon 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 First Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and First Horizon.
Diversification Opportunities for Nu Holdings and First Horizon
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nu Holdings and First is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and First Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon has no effect on the direction of Nu Holdings i.e., Nu Holdings and First Horizon go up and down completely randomly.
Pair Corralation between Nu Holdings and First Horizon
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.32 times more return on investment than First Horizon. However, Nu Holdings is 1.32 times more volatile than First Horizon. It trades about 0.09 of its potential returns per unit of risk. First Horizon is currently generating about 0.02 per unit of risk. If you would invest 487.00 in Nu Holdings on November 2, 2024 and sell it today you would earn a total of 868.50 from holding Nu Holdings or generate 178.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. First Horizon
Performance |
| Timeline |
| Nu Holdings |
| First Horizon |
Nu Holdings and First Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and First Horizon
The main advantage of trading using opposite Nu Holdings and First Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, First Horizon 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 First Horizon will offset losses from the drop in First Horizon's long position.| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
| First Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. Customers Bancorp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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