Correlation Between Nu Holdings and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Farmers Merchants 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 Farmers Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Farmers Merchants Bancorp, you can compare the effects of market volatilities on Nu Holdings and Farmers Merchants 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 Farmers Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Farmers Merchants.
Diversification Opportunities for Nu Holdings and Farmers Merchants
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nu Holdings and Farmers is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants Bancorp 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 Farmers Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of Nu Holdings i.e., Nu Holdings and Farmers Merchants go up and down completely randomly.
Pair Corralation between Nu Holdings and Farmers Merchants
Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 1.52 times more return on investment than Farmers Merchants. However, Nu Holdings is 1.52 times more volatile than Farmers Merchants Bancorp. It trades about -0.05 of its potential returns per unit of risk. Farmers Merchants Bancorp is currently generating about -0.18 per unit of risk. If you would invest 1,200 in Nu Holdings on December 4, 2024 and sell it today you would lose (154.00) from holding Nu Holdings or give up 12.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nu Holdings vs. Farmers Merchants Bancorp
Performance |
Timeline |
Nu Holdings |
Farmers Merchants Bancorp |
Nu Holdings and Farmers Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nu Holdings and Farmers Merchants
The main advantage of trading using opposite Nu Holdings and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Farmers Merchants 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 Farmers Merchants will offset losses from the drop in Farmers Merchants' 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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