Correlation Between Bank of Nova Scotia and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and T.J. Maxx 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 T.J. Maxx 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 The TJX Companies, you can compare the effects of market volatilities on Bank of Nova Scotia and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and T.J. Maxx.
Diversification Opportunities for Bank of Nova Scotia and T.J. Maxx
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and T.J. is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and T.J. Maxx go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and T.J. Maxx
Assuming the 90 days trading horizon The Bank of is expected to generate 1.04 times more return on investment than T.J. Maxx. However, Bank of Nova Scotia is 1.04 times more volatile than The TJX Companies. It trades about 0.14 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.04 per unit of risk. If you would invest 95,471 in The Bank of on September 12, 2024 and sell it today you would earn a total of 17,029 from holding The Bank of or generate 17.84% 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. The TJX Companies
Performance |
| Timeline |
| Bank of Nova Scotia |
| TJX Companies |
Bank of Nova Scotia and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and T.J. Maxx
The main advantage of trading using opposite Bank of Nova Scotia and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Bank of Nova Scotia vs. FIBRA Storage | Bank of Nova Scotia vs. New Oriental Education | Bank of Nova Scotia vs. Grupo Sports World | Bank of Nova Scotia vs. Verizon Communications |
| T.J. Maxx vs. Lloyds Banking Group | T.J. Maxx vs. Verizon Communications | T.J. Maxx vs. Applied Materials | T.J. Maxx 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |