Correlation Between Bank of Nova Scotia and Life Banc
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Life Banc 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 Life Banc 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 Life Banc Split, you can compare the effects of market volatilities on Bank of Nova Scotia and Life Banc 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 Life Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Life Banc.
Diversification Opportunities for Bank of Nova Scotia and Life Banc
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Life is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Life Banc Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Banc Split 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 Life Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Banc Split has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Life Banc go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Life Banc
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 1.1 times less return on investment than Life Banc. In addition to that, Bank of Nova Scotia is 1.11 times more volatile than Life Banc Split. It trades about 0.22 of its total potential returns per unit of risk. Life Banc Split is currently generating about 0.27 per unit of volatility. If you would invest 734.00 in Life Banc Split on September 1, 2024 and sell it today you would earn a total of 230.00 from holding Life Banc Split or generate 31.34% 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. Life Banc Split
Performance |
| Timeline |
| Bank of Nova Scotia |
| Life Banc Split |
Bank of Nova Scotia and Life Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Life Banc
The main advantage of trading using opposite Bank of Nova Scotia and Life Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Life Banc 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 Life Banc will offset losses from the drop in Life Banc'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 |
| Life Banc vs. Global Dividend Growth | Life Banc vs. Dividend Growth Split | Life Banc vs. Brompton Split Banc | Life Banc vs. Financial 15 Split |
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 CEOs Directory module to screen CEOs from public companies around the world.
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