Correlation Between Bank of Nova Scotia and IPC MEXICO
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO, you can compare the effects of market volatilities on Bank of Nova Scotia and IPC MEXICO 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 IPC MEXICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and IPC MEXICO.
Diversification Opportunities for Bank of Nova Scotia and IPC MEXICO
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and IPC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and IPC MEXICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPC MEXICO 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 IPC MEXICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPC MEXICO has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and IPC MEXICO go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and IPC MEXICO
Assuming the 90 days trading horizon The Bank of is expected to generate 1.45 times more return on investment than IPC MEXICO. However, Bank of Nova Scotia is 1.45 times more volatile than IPC MEXICO. It trades about 0.12 of its potential returns per unit of risk. IPC MEXICO is currently generating about -0.01 per unit of risk. If you would invest 71,702 in The Bank of on September 12, 2024 and sell it today you would earn a total of 44,098 from holding The Bank of or generate 61.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.05% |
| Values | Daily Returns |
The Bank of vs. IPC MEXICO
Performance |
| Timeline |
Bank of Nova Scotia and IPC MEXICO Volatility Contrast
Predicted Return Density |
| Returns |
The Bank of
Pair trading matchups for Bank of Nova Scotia
IPC MEXICO
Pair trading matchups for IPC MEXICO
Pair Trading with Bank of Nova Scotia and IPC MEXICO
The main advantage of trading using opposite Bank of Nova Scotia and IPC MEXICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, IPC MEXICO 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 IPC MEXICO will offset losses from the drop in IPC MEXICO's long position.| Bank of Nova Scotia vs. Genworth Financial | Bank of Nova Scotia vs. McEwen Mining | Bank of Nova Scotia vs. Samsung Electronics Co | Bank of Nova Scotia vs. Prudential Financial |
| IPC MEXICO vs. UnitedHealth Group Incorporated | IPC MEXICO vs. Applied Materials | IPC MEXICO vs. Grupo Sports World | IPC MEXICO vs. New Oriental Education |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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