Correlation Between Nu Holdings and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Prosperity Bancshares 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 Prosperity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Prosperity Bancshares, you can compare the effects of market volatilities on Nu Holdings and Prosperity Bancshares 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 Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Prosperity Bancshares.
Diversification Opportunities for Nu Holdings and Prosperity Bancshares
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nu Holdings and Prosperity is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Bancshares 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 Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of Nu Holdings i.e., Nu Holdings and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between Nu Holdings and Prosperity Bancshares
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.46 times more return on investment than Prosperity Bancshares. However, Nu Holdings is 1.46 times more volatile than Prosperity Bancshares. It trades about 0.11 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about 0.04 per unit of risk. If you would invest 393.00 in Nu Holdings on August 30, 2024 and sell it today you would earn a total of 960.00 from holding Nu Holdings or generate 244.27% 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. Prosperity Bancshares
Performance |
| Timeline |
| Nu Holdings |
| Prosperity Bancshares |
Nu Holdings and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Prosperity Bancshares
The main advantage of trading using opposite Nu Holdings and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Prosperity Bancshares 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 Prosperity Bancshares will offset losses from the drop in Prosperity Bancshares' long position.| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |