Correlation Between Nu Holdings and City Holding

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

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

Diversification Opportunities for Nu Holdings and City Holding

0.68

Correlation Coefficient

Nu Holdings  City Holding

Poor diversification

The 3 months correlation between Nu Holdings and City is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of Nu Holdings i.e., Nu Holdings and City Holding go up and down completely randomly.

Pair Corralation between Nu Holdings and City Holding

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the City Holding. In addition to that, Nu Holdings is 1.88 times more volatile than City Holding. It trades about 0.0 of its total potential returns per unit of risk. City Holding is currently generating about 0.06 per unit of volatility. If you would invest  11,600  in City Holding on May 7, 2025 and sell it today you would earn a total of  495.00  from holding City Holding or generate 4.27% 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.  City Holding

Nu Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nu Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

City Holding

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in City Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, City Holding is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nu Holdings and City Holding

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

The idea behind Nu Holdings and City Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.