Correlation Between Bank of Nova Scotia and Delta Air
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Delta Air 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 Bank of Nova Scotia and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Delta Air Lines, you can compare the effects of market volatilities on Bank of Nova Scotia and Delta Air 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 Bank of Nova Scotia with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Delta Air.
Diversification Opportunities for Bank of Nova Scotia and Delta Air
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Delta is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and Bank of Nova Scotia 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 The Bank of are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Delta Air go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Delta Air
Assuming the 90 days trading horizon The Bank of is expected to generate 1.2 times more return on investment than Delta Air. However, Bank of Nova Scotia is 1.2 times more volatile than Delta Air Lines. It trades about 0.21 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.24 per unit of risk. If you would invest 101,800 in The Bank of on August 30, 2024 and sell it today you would earn a total of 14,400 from holding The Bank of or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Delta Air Lines
Performance |
| Timeline |
| Bank of Nova Scotia |
| Delta Air Lines |
Bank of Nova Scotia and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Delta Air
The main advantage of trading using opposite Bank of Nova Scotia and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Bank of Nova Scotia vs. Grupo Sports World | Bank of Nova Scotia vs. Grupo Carso SAB | Bank of Nova Scotia vs. UnitedHealth Group Incorporated | Bank of Nova Scotia vs. Cognizant Technology Solutions |
| Delta Air vs. Southern Copper | Delta Air vs. McEwen Mining | Delta Air vs. Ameriprise Financial | Delta Air vs. Grupo Carso SAB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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