Correlation Between Bank of Nova Scotia and Nickel Creek
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Nickel Creek 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 Nickel Creek 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 Nickel Creek Platinum, you can compare the effects of market volatilities on Bank of Nova Scotia and Nickel Creek 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 Nickel Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Nickel Creek.
Diversification Opportunities for Bank of Nova Scotia and Nickel Creek
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Nickel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum 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 Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Nickel Creek go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Nickel Creek
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 6.02 times less return on investment than Nickel Creek. But when comparing it to its historical volatility, Bank of Nova is 23.89 times less risky than Nickel Creek. It trades about 0.22 of its potential returns per unit of risk. Nickel Creek Platinum is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Nickel Creek Platinum on September 2, 2024 and sell it today you would lose (120.00) from holding Nickel Creek Platinum or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Nickel Creek Platinum
Performance |
| Timeline |
| Bank of Nova Scotia |
| Nickel Creek Platinum |
Bank of Nova Scotia and Nickel Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Nickel Creek
The main advantage of trading using opposite Bank of Nova Scotia and Nickel Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Nickel Creek 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 Nickel Creek will offset losses from the drop in Nickel Creek'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 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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