Correlation Between Nu Holdings and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Banco Santander 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 Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Banco Santander SA, you can compare the effects of market volatilities on Nu Holdings and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Banco Santander.
Diversification Opportunities for Nu Holdings and Banco Santander
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nu Holdings and Banco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Nu Holdings i.e., Nu Holdings and Banco Santander go up and down completely randomly.
Pair Corralation between Nu Holdings and Banco Santander
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Banco Santander. In addition to that, Nu Holdings is 1.37 times more volatile than Banco Santander SA. It trades about -0.17 of its total potential returns per unit of risk. Banco Santander SA is currently generating about -0.16 per unit of volatility. If you would invest 489.00 in Banco Santander SA on August 27, 2024 and sell it today you would lose (34.00) from holding Banco Santander SA or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. Banco Santander SA
Performance |
| Timeline |
| Nu Holdings |
| Banco Santander SA |
Nu Holdings and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Banco Santander
The main advantage of trading using opposite Nu Holdings and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander'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 |
| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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