Correlation Between Bank of Nova Scotia and E Split
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and E Split 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 E Split into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Nova and E Split Corp, you can compare the effects of market volatilities on Bank of Nova Scotia and E Split 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 E Split. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and E Split.
Diversification Opportunities for Bank of Nova Scotia and E Split
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and ENS-PA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and E Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Split Corp 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 Bank of Nova are associated (or correlated) with E Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Split Corp has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and E Split go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and E Split
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 1.43 times less return on investment than E Split. In addition to that, Bank of Nova Scotia is 1.2 times more volatile than E Split Corp. It trades about 0.21 of its total potential returns per unit of risk. E Split Corp is currently generating about 0.37 per unit of volatility. If you would invest 1,050 in E Split Corp on September 4, 2024 and sell it today you would earn a total of 70.00 from holding E Split Corp or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. E Split Corp
Performance |
| Timeline |
| Bank of Nova Scotia |
| E Split Corp |
Bank of Nova Scotia and E Split Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and E Split
The main advantage of trading using opposite Bank of Nova Scotia and E Split positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, E Split 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 E Split will offset losses from the drop in E Split's long position.| Bank of Nova Scotia vs. Toronto Dominion Bank | Bank of Nova Scotia vs. Royal Bank of | Bank of Nova Scotia vs. Bank of Montreal | Bank of Nova Scotia vs. Canadian Imperial Bank |
| E Split vs. Bank of Nova | E Split vs. CVW CleanTech | E Split vs. National Bank of | E Split vs. Laurentian Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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