Correlation Between Bank of Nova Scotia and Nano One
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Nano One 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 Nano One 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 Nano One Materials, you can compare the effects of market volatilities on Bank of Nova Scotia and Nano One 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 Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Nano One.
Diversification Opportunities for Bank of Nova Scotia and Nano One
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Nano is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Nano One go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Nano One
Assuming the 90 days trading horizon Bank of Nova is expected to generate 0.11 times more return on investment than Nano One. However, Bank of Nova is 9.33 times less risky than Nano One. It trades about -0.4 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.07 per unit of risk. If you would invest 7,804 in Bank of Nova on October 12, 2024 and sell it today you would lose (342.00) from holding Bank of Nova or give up 4.38% 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. Nano One Materials
Performance |
| Timeline |
| Bank of Nova Scotia |
| Nano One Materials |
Bank of Nova Scotia and Nano One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Nano One
The main advantage of trading using opposite Bank of Nova Scotia and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Nano One 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 Nano One will offset losses from the drop in Nano One'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 |
| Nano One vs. iA Financial | Nano One vs. Constellation Software | Nano One vs. Fairfax Financial Holdings | Nano One vs. Bank of Nova |
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.
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