Correlation Between Nu Holdings and Indivior PLC

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

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

Diversification Opportunities for Nu Holdings and Indivior PLC

-0.75

Correlation Coefficient

Nu Holdings  Indivior PLC

Pay attention - limited upside

The 3 months correlation between Nu Holdings and Indivior is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Indivior PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC 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 Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC has no effect on the direction of Nu Holdings i.e., Nu Holdings and Indivior PLC go up and down completely randomly.

Pair Corralation between Nu Holdings and Indivior PLC

Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 3.6 times less return on investment than Indivior PLC. In addition to that, Nu Holdings is 1.51 times more volatile than Indivior PLC. It trades about 0.04 of its total potential returns per unit of risk. Indivior PLC is currently generating about 0.23 per unit of volatility. If you would invest  2,310  in Indivior PLC on October 4, 2024 and sell it today you would earn a total of  84.00  from holding Indivior PLC or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	2.67%
Values	Daily Returns

Nu Holdings  vs.  Indivior PLC

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Indivior PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indivior PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indivior PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nu Holdings and Indivior PLC

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

The idea behind Nu Holdings and Indivior PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.