Correlation Between Bank of Nova Scotia and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on Bank of Nova Scotia and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Plaza Retail.
Diversification Opportunities for Bank of Nova Scotia and Plaza Retail
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Plaza is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Plaza Retail go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Plaza Retail
Assuming the 90 days trading horizon Bank of Nova is expected to under-perform the Plaza Retail. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Nova is 1.39 times less risky than Plaza Retail. The stock trades about -0.23 of its potential returns per unit of risk. The Plaza Retail REIT is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 357.00 in Plaza Retail REIT on October 21, 2024 and sell it today you would lose (4.00) from holding Plaza Retail REIT or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Plaza Retail REIT
Performance |
| Timeline |
| Bank of Nova Scotia |
| Plaza Retail REIT |
Bank of Nova Scotia and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Plaza Retail
The main advantage of trading using opposite Bank of Nova Scotia and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail'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 |
| Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate | Plaza Retail vs. Choice Properties Real |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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