Correlation Between Nu Holdings and CrossFirst Bankshares
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and CrossFirst Bankshares 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 CrossFirst Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and CrossFirst Bankshares, you can compare the effects of market volatilities on Nu Holdings and CrossFirst Bankshares 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 CrossFirst Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and CrossFirst Bankshares.
Diversification Opportunities for Nu Holdings and CrossFirst Bankshares
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nu Holdings and CrossFirst is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares 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 CrossFirst Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CrossFirst Bankshares has no effect on the direction of Nu Holdings i.e., Nu Holdings and CrossFirst Bankshares go up and down completely randomly.
Pair Corralation between Nu Holdings and CrossFirst Bankshares
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.22 times more return on investment than CrossFirst Bankshares. However, Nu Holdings is 1.22 times more volatile than CrossFirst Bankshares. It trades about -0.02 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about -0.05 per unit of risk. If you would invest 1,299 in Nu Holdings on October 20, 2024 and sell it today you would lose (146.00) from holding Nu Holdings or give up 11.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.21% |
Values | Daily Returns |
Nu Holdings vs. CrossFirst Bankshares
Performance |
Timeline |
Nu Holdings |
CrossFirst Bankshares |
Nu Holdings and CrossFirst Bankshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nu Holdings and CrossFirst Bankshares
The main advantage of trading using opposite Nu Holdings and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, CrossFirst Bankshares 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 CrossFirst Bankshares will offset losses from the drop in CrossFirst Bankshares' long position.Nu Holdings vs. JPMorgan Chase Co | Nu Holdings vs. Citigroup | Nu Holdings vs. Wells Fargo | Nu Holdings vs. Toronto Dominion Bank |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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