Correlation Between Bank of Nova Scotia and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Honeywell International 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 Honeywell International 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 Honeywell International, you can compare the effects of market volatilities on Bank of Nova Scotia and Honeywell International 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 Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Honeywell International.
Diversification Opportunities for Bank of Nova Scotia and Honeywell International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Honeywell is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International 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 Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Honeywell International go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Honeywell International
Assuming the 90 days trading horizon The Bank of is expected to generate 1.07 times more return on investment than Honeywell International. However, Bank of Nova Scotia is 1.07 times more volatile than Honeywell International. It trades about 0.16 of its potential returns per unit of risk. Honeywell International is currently generating about 0.11 per unit of risk. If you would invest 81,644 in The Bank of on October 19, 2024 and sell it today you would earn a total of 28,356 from holding The Bank of or generate 34.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Honeywell International
Performance |
| Timeline |
| Bank of Nova Scotia |
| Honeywell International |
Bank of Nova Scotia and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Honeywell International
The main advantage of trading using opposite Bank of Nova Scotia and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.| Bank of Nova Scotia vs. KB Home | Bank of Nova Scotia vs. New Oriental Education | Bank of Nova Scotia vs. Taiwan Semiconductor Manufacturing | Bank of Nova Scotia vs. Monster Beverage Corp |
| Honeywell International vs. The Bank of | Honeywell International vs. Hoteles City Express | Honeywell International vs. Grupo Hotelero Santa | Honeywell International vs. Martin Marietta Materials |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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