Correlation Between Nu Holdings and Bancorp

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

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

Diversification Opportunities for Nu Holdings and Bancorp

0.52

Correlation Coefficient

Nu Holdings  Bancorp

Very weak diversification

The 3 months correlation between Nu Holdings and Bancorp is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and The Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancorp 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 Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancorp has no effect on the direction of Nu Holdings i.e., Nu Holdings and Bancorp go up and down completely randomly.

Pair Corralation between Nu Holdings and Bancorp

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the Bancorp. In addition to that, Nu Holdings is 1.14 times more volatile than The Bancorp. It trades about 0.0 of its total potential returns per unit of risk. The Bancorp is currently generating about 0.17 per unit of volatility. If you would invest  5,127  in The Bancorp on May 7, 2025 and sell it today you would earn a total of  1,321  from holding The Bancorp or generate 25.77% return on investment over 90 days.

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

Nu Holdings  vs.  The Bancorp

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.

Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nu Holdings and Bancorp

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

The idea behind Nu Holdings and The Bancorp 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 CEOs Directory module to screen CEOs from public companies around the world.