Correlation Between Nu Holdings and Royal Bank

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

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

Diversification Opportunities for Nu Holdings and Royal Bank

0.13

Correlation Coefficient

Nu Holdings  Royal Bank

Average diversification

The 3 months correlation between Nu Holdings and Royal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Nu Holdings i.e., Nu Holdings and Royal Bank go up and down completely randomly.

Pair Corralation between Nu Holdings and Royal Bank

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Royal Bank. In addition to that, Nu Holdings is 3.04 times more volatile than Royal Bank of. It trades about -0.05 of its total potential returns per unit of risk. Royal Bank of is currently generating about 0.09 per unit of volatility. If you would invest  11,979  in Royal Bank of on August 30, 2024 and sell it today you would earn a total of  548.00  from holding Royal Bank of or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nu Holdings  vs.  Royal Bank of

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Royal Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Royal Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nu Holdings and Royal Bank

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

The idea behind Nu Holdings and Royal Bank of 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.