Correlation Between Apple and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Apple and Bank of Nova Scotia 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 Apple and Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and Bank of Nova, you can compare the effects of market volatilities on Apple and Bank of Nova Scotia 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 Apple with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Bank of Nova Scotia.
Diversification Opportunities for Apple and Bank of Nova Scotia
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Bank is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Bank of Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia and Apple 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 Apple Inc CDR are associated (or correlated) with Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Apple i.e., Apple and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Apple and Bank of Nova Scotia
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 1.34 times more return on investment than Bank of Nova Scotia. However, Apple is 1.34 times more volatile than Bank of Nova. It trades about 0.07 of its potential returns per unit of risk. Bank of Nova is currently generating about 0.08 per unit of risk. If you would invest 2,462 in Apple Inc CDR on August 26, 2024 and sell it today you would earn a total of 906.00 from holding Apple Inc CDR or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Bank of Nova
Performance |
| Timeline |
| Apple Inc CDR |
| Bank of Nova Scotia |
Apple and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Bank of Nova Scotia
The main advantage of trading using opposite Apple and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.| Apple vs. MTY Food Group | Apple vs. Nicola Mining | Apple vs. Metalero Mining Corp | Apple vs. Maple Leaf Foods |
| Bank of Nova Scotia vs. Toronto Dominion Bank | Bank of Nova Scotia vs. Royal Bank of | Bank of Nova Scotia vs. Bank of Montreal | Bank of Nova Scotia vs. Canadian Imperial Bank |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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