Correlation Between Bank of Nova Scotia and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Hoteles City 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 Hoteles City 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 Hoteles City Express, you can compare the effects of market volatilities on Bank of Nova Scotia and Hoteles City 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 Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Hoteles City.
Diversification Opportunities for Bank of Nova Scotia and Hoteles City
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Hoteles is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express 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 Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Hoteles City go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Hoteles City
Assuming the 90 days trading horizon The Bank of is expected to under-perform the Hoteles City. But the stock apears to be less risky and, when comparing its historical volatility, The Bank of is 1.08 times less risky than Hoteles City. The stock trades about -0.22 of its potential returns per unit of risk. The Hoteles City Express is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 443.00 in Hoteles City Express on November 27, 2024 and sell it today you would earn a total of 18.00 from holding Hoteles City Express or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Hoteles City Express
Performance |
| Timeline |
| Bank of Nova Scotia |
| Hoteles City Express |
Bank of Nova Scotia and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Hoteles City
The main advantage of trading using opposite Bank of Nova Scotia and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City's long position.| Bank of Nova Scotia vs. KB Home | Bank of Nova Scotia vs. Verizon Communications | Bank of Nova Scotia vs. DXC Technology | Bank of Nova Scotia vs. Applied Materials |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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