Correlation Between Nu Holdings and Zions Bancorporation

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

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

Diversification Opportunities for Nu Holdings and Zions Bancorporation

-0.56

Correlation Coefficient

Nu Holdings  Zions Bancorporation

Excellent diversification

The 3 months correlation between Nu Holdings and Zions is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation 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 Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Nu Holdings i.e., Nu Holdings and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Nu Holdings and Zions Bancorporation

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Zions Bancorporation. In addition to that, Nu Holdings is 3.95 times more volatile than Zions Bancorporation National. It trades about -0.24 of its total potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.22 per unit of volatility. If you would invest  2,190  in Zions Bancorporation National on September 23, 2024 and sell it today you would earn a total of  169.00  from holding Zions Bancorporation National or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nu Holdings  vs.  Zions Bancorp. National

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.

Zions Bancorporation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation National are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Zions Bancorporation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nu Holdings and Zions Bancorporation

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

The idea behind Nu Holdings and Zions Bancorporation National 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.