Correlation Between Nu Holdings and Toronto Dominion
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Toronto Dominion 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 Toronto Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Toronto Dominion Bank, you can compare the effects of market volatilities on Nu Holdings and Toronto Dominion 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 Toronto Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Toronto Dominion.
Diversification Opportunities for Nu Holdings and Toronto Dominion
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nu Holdings and Toronto is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Toronto Dominion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toronto Dominion 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 Toronto Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toronto Dominion Bank has no effect on the direction of Nu Holdings i.e., Nu Holdings and Toronto Dominion go up and down completely randomly.
Pair Corralation between Nu Holdings and Toronto Dominion
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 2.22 times more return on investment than Toronto Dominion. However, Nu Holdings is 2.22 times more volatile than Toronto Dominion Bank. It trades about 0.47 of its potential returns per unit of risk. Toronto Dominion Bank is currently generating about 0.4 per unit of risk. If you would invest 1,063 in Nu Holdings on November 3, 2024 and sell it today you would earn a total of 261.00 from holding Nu Holdings or generate 24.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Holdings vs. Toronto Dominion Bank
Performance |
| Timeline |
| Nu Holdings |
| Toronto Dominion Bank |
Nu Holdings and Toronto Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Holdings and Toronto Dominion
The main advantage of trading using opposite Nu Holdings and Toronto Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Toronto Dominion 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 Toronto Dominion will offset losses from the drop in Toronto Dominion's long position.| Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
| Toronto Dominion vs. Nu Holdings | Toronto Dominion vs. Bank of America | Toronto Dominion vs. HSBC Holdings PLC | Toronto Dominion vs. Royal Bank of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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