Correlation Between Nu Holdings and Itau Unibanco
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Itau Unibanco 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 Itau Unibanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Itau Unibanco Banco, you can compare the effects of market volatilities on Nu Holdings and Itau Unibanco 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 Itau Unibanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Itau Unibanco.
Diversification Opportunities for Nu Holdings and Itau Unibanco
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nu Holdings and Itau is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Itau Unibanco Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau Unibanco Banco 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 Itau Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau Unibanco Banco has no effect on the direction of Nu Holdings i.e., Nu Holdings and Itau Unibanco go up and down completely randomly.
Pair Corralation between Nu Holdings and Itau Unibanco
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Itau Unibanco. In addition to that, Nu Holdings is 2.54 times more volatile than Itau Unibanco Banco. It trades about -0.09 of its total potential returns per unit of risk. Itau Unibanco Banco is currently generating about 0.0 per unit of volatility. If you would invest 566.00 in Itau Unibanco Banco on November 30, 2024 and sell it today you would lose (2.00) from holding Itau Unibanco Banco or give up 0.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nu Holdings vs. Itau Unibanco Banco
Performance |
Timeline |
Nu Holdings |
Itau Unibanco Banco |
Nu Holdings and Itau Unibanco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nu Holdings and Itau Unibanco
The main advantage of trading using opposite Nu Holdings and Itau Unibanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Itau Unibanco 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 Itau Unibanco will offset losses from the drop in Itau Unibanco's long position.Nu Holdings vs. JPMorgan Chase Co | ||
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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