Correlation Between Nu Holdings and National Australia
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and National Australia 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 National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and National Australia Bank, you can compare the effects of market volatilities on Nu Holdings and National Australia 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 National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and National Australia.
Diversification Opportunities for Nu Holdings and National Australia
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nu Holdings and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank 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 National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Nu Holdings i.e., Nu Holdings and National Australia go up and down completely randomly.
Pair Corralation between Nu Holdings and National Australia
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the National Australia. In addition to that, Nu Holdings is 5.19 times more volatile than National Australia Bank. It trades about -0.12 of its total potential returns per unit of risk. National Australia Bank is currently generating about -0.06 per unit of volatility. If you would invest 2,540 in National Australia Bank on August 27, 2024 and sell it today you would lose (17.00) from holding National Australia Bank or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Nu Holdings vs. National Australia Bank
Performance |
| Timeline |
| Nu Holdings |
| National Australia Bank |
Nu Holdings and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and National Australia
The main advantage of trading using opposite Nu Holdings and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia'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 |
| National Australia vs. National Australia Bank | National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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