Correlation Between Bank of Nova Scotia and Lomiko Metals
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Lomiko Metals 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 Lomiko Metals 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 Lomiko Metals, you can compare the effects of market volatilities on Bank of Nova Scotia and Lomiko Metals 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 Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Lomiko Metals.
Diversification Opportunities for Bank of Nova Scotia and Lomiko Metals
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Lomiko is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals 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 Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Lomiko Metals go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Lomiko Metals
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 9.66 times less return on investment than Lomiko Metals. But when comparing it to its historical volatility, Bank of Nova is 12.53 times less risky than Lomiko Metals. It trades about 0.06 of its potential returns per unit of risk. Lomiko Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Lomiko Metals on September 3, 2024 and sell it today you would lose (12.00) from holding Lomiko Metals or give up 48.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Lomiko Metals
Performance |
| Timeline |
| Bank of Nova Scotia |
| Lomiko Metals |
Bank of Nova Scotia and Lomiko Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Lomiko Metals
The main advantage of trading using opposite Bank of Nova Scotia and Lomiko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Lomiko Metals 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 Lomiko Metals will offset losses from the drop in Lomiko Metals' 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 |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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