Correlation Between Nu Holdings and Middlefield Banc

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

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

Diversification Opportunities for Nu Holdings and Middlefield Banc

-0.33

Correlation Coefficient

Nu Holdings  Middlefield Banc

Very good diversification

The 3 months correlation between Nu Holdings and Middlefield is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Middlefield Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlefield Banc 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 Middlefield Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlefield Banc has no effect on the direction of Nu Holdings i.e., Nu Holdings and Middlefield Banc go up and down completely randomly.

Pair Corralation between Nu Holdings and Middlefield Banc

Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 0.97 times more return on investment than Middlefield Banc. However, Nu Holdings is 1.03 times less risky than Middlefield Banc. It trades about 0.09 of its potential returns per unit of risk. Middlefield Banc is currently generating about 0.03 per unit of risk. If you would invest  407.00  in Nu Holdings on September 20, 2024 and sell it today you would earn a total of  637.00  from holding Nu Holdings or generate 156.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nu Holdings  vs.  Middlefield Banc

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Middlefield Banc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Middlefield Banc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Middlefield Banc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nu Holdings and Middlefield Banc

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

The idea behind Nu Holdings and Middlefield Banc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.