Correlation Between Nu Holdings and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Regions 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 Regions 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 Regions Financial, you can compare the effects of market volatilities on Nu Holdings and Regions 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Regions Financial.
Diversification Opportunities for Nu Holdings and Regions Financial
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nu Holdings and Regions is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Nu Holdings i.e., Nu Holdings and Regions Financial go up and down completely randomly.
Pair Corralation between Nu Holdings and Regions Financial
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Regions Financial. In addition to that, Nu Holdings is 1.07 times more volatile than Regions Financial. It trades about -0.21 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.23 per unit of volatility. If you would invest 2,387 in Regions Financial on August 30, 2024 and sell it today you would earn a total of 338.00 from holding Regions Financial or generate 14.16% 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. Regions Financial
Performance |
| Timeline |
| Nu Holdings |
| Regions Financial |
Nu Holdings and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Regions Financial
The main advantage of trading using opposite Nu Holdings and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
| Regions Financial vs. SVB T Corp | Regions Financial vs. First Capital | Regions Financial vs. Pioneer Bankcorp | Regions Financial vs. Liberty Northwest 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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