Correlation Between Bank of Nova Scotia and Big Pharma
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Big Pharma 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 Big Pharma 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 Big Pharma Split, you can compare the effects of market volatilities on Bank of Nova Scotia and Big Pharma 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 Big Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Big Pharma.
Diversification Opportunities for Bank of Nova Scotia and Big Pharma
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Big is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Big Pharma Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Pharma Split 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 Big Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Pharma Split has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Big Pharma go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Big Pharma
Assuming the 90 days trading horizon Bank of Nova is expected to under-perform the Big Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Nova is 2.71 times less risky than Big Pharma. The stock trades about -0.33 of its potential returns per unit of risk. The Big Pharma Split is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,319 in Big Pharma Split on October 9, 2024 and sell it today you would earn a total of 11.00 from holding Big Pharma Split or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Big Pharma Split
Performance |
| Timeline |
| Bank of Nova Scotia |
| Big Pharma Split |
Bank of Nova Scotia and Big Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Big Pharma
The main advantage of trading using opposite Bank of Nova Scotia and Big Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Big Pharma 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 Big Pharma will offset losses from the drop in Big Pharma'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 |
| Big Pharma vs. Sustainable Power Infrastructure | Big Pharma vs. Global Dividend Growth | Big Pharma vs. Brompton Lifeco Split | Big Pharma vs. Prime Dividend Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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