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
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nu Holdings and Royal is 0.76. 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 1.99 times more volatile than Royal Bank of. It trades about -0.11 of its total potential returns per unit of risk. Royal Bank of is currently generating about 0.3 per unit of volatility. If you would invest 11,983 in Royal Bank of on March 9, 2025 and sell it today you would earn a total of 770.00 from holding Royal Bank of or generate 6.43% 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. Royal Bank of
Performance |
| Timeline |
| Nu Holdings |
| Royal Bank |
Nu Holdings and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
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.| Nu Holdings vs. Western Alliance Bancorporation | Nu Holdings vs. KeyCorp | Nu Holdings vs. Truist Financial Corp | Nu Holdings vs. Zions Bancorporation |
| Royal Bank vs. Canadian Imperial Bank | Royal Bank vs. Bank of Montreal | Royal Bank vs. Bank of Nova | Royal Bank vs. Bank of America |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |