Correlation Between Prosperity Bancshares and Nu Holdings
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and Nu Holdings 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 Prosperity Bancshares and Nu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Nu Holdings, you can compare the effects of market volatilities on Prosperity Bancshares and Nu Holdings 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 Prosperity Bancshares with a short position of Nu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Nu Holdings.
Diversification Opportunities for Prosperity Bancshares and Nu Holdings
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prosperity and Nu Holdings is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Nu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Holdings and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with Nu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Holdings has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and Nu Holdings go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Nu Holdings
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.81 times more return on investment than Nu Holdings. However, Prosperity Bancshares is 1.24 times less risky than Nu Holdings. It trades about 0.28 of its potential returns per unit of risk. Nu Holdings is currently generating about -0.21 per unit of risk. If you would invest 7,325 in Prosperity Bancshares on August 30, 2024 and sell it today you would earn a total of 1,092 from holding Prosperity Bancshares or generate 14.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prosperity Bancshares vs. Nu Holdings
Performance |
Timeline |
Prosperity Bancshares |
Nu Holdings |
Prosperity Bancshares and Nu Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prosperity Bancshares and Nu Holdings
The main advantage of trading using opposite Prosperity Bancshares and Nu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, Nu Holdings 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 Nu Holdings will offset losses from the drop in Nu Holdings' long position.Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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