Correlation Between Nu Holdings and Commerce Bancshares
Can any of the company-specific risk be diversified away by investing in both Nu Holdings and Commerce Bancshares 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 Commerce Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Holdings and Commerce Bancshares, you can compare the effects of market volatilities on Nu Holdings and Commerce Bancshares 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 Commerce Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and Commerce Bancshares.
Diversification Opportunities for Nu Holdings and Commerce Bancshares
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nu Holdings and Commerce is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and Commerce Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Bancshares 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 Commerce Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Bancshares has no effect on the direction of Nu Holdings i.e., Nu Holdings and Commerce Bancshares go up and down completely randomly.
Pair Corralation between Nu Holdings and Commerce Bancshares
Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Commerce Bancshares. In addition to that, Nu Holdings is 1.13 times more volatile than Commerce Bancshares. It trades about -0.24 of its total potential returns per unit of risk. Commerce Bancshares is currently generating about 0.15 per unit of volatility. If you would invest 5,320 in Commerce Bancshares on January 28, 2024 and sell it today you would earn a total of 221.00 from holding Commerce Bancshares or generate 4.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Nu Holdings vs. Commerce Bancshares
Performance |
Timeline |
Nu Holdings |
Commerce Bancshares |
Nu Holdings and Commerce Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nu Holdings and Commerce Bancshares
The main advantage of trading using opposite Nu Holdings and Commerce Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Holdings position performs unexpectedly, Commerce Bancshares 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 Commerce Bancshares will offset losses from the drop in Commerce Bancshares' long position.Nu Holdings vs. Woori Financial Group | Nu Holdings vs. Korea Electric Power | Nu Holdings vs. Orix Corp Ads | Nu Holdings vs. SK Telecom Co |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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