Correlation Between Bank of Nova Scotia and New Oriental
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and New Oriental 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 New Oriental 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 New Oriental Education, you can compare the effects of market volatilities on Bank of Nova Scotia and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and New Oriental.
Diversification Opportunities for Bank of Nova Scotia and New Oriental
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and New is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and New Oriental go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and New Oriental
Assuming the 90 days trading horizon The Bank of is expected to generate 13.12 times more return on investment than New Oriental. However, Bank of Nova Scotia is 13.12 times more volatile than New Oriental Education. It trades about 0.22 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.03 per unit of risk. If you would invest 101,800 in The Bank of on August 29, 2024 and sell it today you would earn a total of 14,433 from holding The Bank of or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. New Oriental Education
Performance |
| Timeline |
| Bank of Nova Scotia |
| New Oriental Education |
Bank of Nova Scotia and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and New Oriental
The main advantage of trading using opposite Bank of Nova Scotia and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Bank of Nova Scotia vs. McEwen Mining | Bank of Nova Scotia vs. Costco Wholesale | Bank of Nova Scotia vs. Monster Beverage Corp | Bank of Nova Scotia vs. Grupo Sports World |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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