Correlation Between Bank of Nova Scotia and Microsoft Corp
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp CDR, you can compare the effects of market volatilities on Bank of Nova Scotia and Microsoft Corp 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 Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Microsoft Corp.
Diversification Opportunities for Bank of Nova Scotia and Microsoft Corp
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Microsoft is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Microsoft Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp CDR 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 Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp CDR has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Microsoft Corp go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Microsoft Corp
Assuming the 90 days trading horizon Bank of Nova is expected to generate 0.46 times more return on investment than Microsoft Corp. However, Bank of Nova is 2.15 times less risky than Microsoft Corp. It trades about 0.56 of its potential returns per unit of risk. Microsoft Corp CDR is currently generating about -0.07 per unit of risk. If you would invest 7,199 in Bank of Nova on August 26, 2024 and sell it today you would earn a total of 692.00 from holding Bank of Nova or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Microsoft Corp CDR
Performance |
| Timeline |
| Bank of Nova Scotia |
| Microsoft Corp CDR |
Bank of Nova Scotia and Microsoft Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Microsoft Corp
The main advantage of trading using opposite Bank of Nova Scotia and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Microsoft Corp 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 Microsoft Corp will offset losses from the drop in Microsoft Corp'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 |
| Microsoft Corp vs. Bip Investment Corp | Microsoft Corp vs. Canaf Investments | Microsoft Corp vs. Dream Office Real | Microsoft Corp vs. Broadcom |
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.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |