Correlation Between Nu Holdings and Voya Financial

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

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

Diversification Opportunities for Nu Holdings and Voya Financial

0.79

Correlation Coefficient

Nu Holdings  Voya Financial

Poor diversification

The 3 months correlation between Nu Holdings and Voya is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of Nu Holdings i.e., Nu Holdings and Voya Financial go up and down completely randomly.

Pair Corralation between Nu Holdings and Voya Financial

Allowing for the 90-day total investment horizon Nu Holdings is expected to generate 2.32 times more return on investment than Voya Financial. However, Nu Holdings is 2.32 times more volatile than Voya Financial. It trades about 0.1 of its potential returns per unit of risk. Voya Financial is currently generating about 0.04 per unit of risk. If you would invest  356.00  in Nu Holdings on September 23, 2024 and sell it today you would earn a total of  682.00  from holding Nu Holdings or generate 191.57% return on investment over 90 days.

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

Nu Holdings  vs.  Voya Financial

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 fragile 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.

Voya Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nu Holdings and Voya Financial

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

The idea behind Nu Holdings and Voya Financial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.