Correlation Between Nu Holdings and Dime Community

Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Dime Community 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 Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nu Holdings and Dime Community Bancshares, you can compare the effects of market volatilities on Nu Holdings and Dime Community 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 Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Dime Community.

Diversification Opportunities for Nu Holdings and Dime Community

0.22

Correlation Coefficient

Nu Holdings  Dime Community

Modest diversification

The 3 months correlation between Nu Holdings and Dime is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Dime Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dime Community Bancshares 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 Dime Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dime Community Bancshares has no effect on the direction of Nu Holdings i.e., Nu Holdings and Dime Community go up and down completely randomly.

Pair Corralation between Nu Holdings and Dime Community

Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 3.65 times more return on investment than Dime Community. However, Nu Holdings is 3.65 times more volatile than Dime Community Bancshares. It trades about 0.07 of its potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.03 per unit of risk. If you would invest  1,024  in Nu Holdings on December 22, 2024 and sell it today you would earn a total of  135.00  from holding Nu Holdings or generate 13.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Nu Holdings  vs.  Dime Community Bancshares

Nu Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nu Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Nu Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dime Community Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dime Community Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Dime Community is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nu Holdings and Dime Community

The main advantage of trading using opposite Nu Holdings and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Dime Community 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 Dime Community will offset losses from the drop in Dime Community's long position.

The idea behind Nu Holdings and Dime Community Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.