Correlation Between Bank of Nova Scotia and Real Matters
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Real Matters 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 Real Matters 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 Real Matters, you can compare the effects of market volatilities on Bank of Nova Scotia and Real Matters 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 Real Matters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Real Matters.
Diversification Opportunities for Bank of Nova Scotia and Real Matters
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Real is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters 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 Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Real Matters go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Real Matters
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 1.46 times less return on investment than Real Matters. But when comparing it to its historical volatility, Bank of Nova is 2.86 times less risky than Real Matters. It trades about 0.19 of its potential returns per unit of risk. Real Matters is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 495.00 in Real Matters on September 3, 2024 and sell it today you would earn a total of 181.00 from holding Real Matters or generate 36.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Real Matters
Performance |
| Timeline |
| Bank of Nova Scotia |
| Real Matters |
Bank of Nova Scotia and Real Matters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Real Matters
The main advantage of trading using opposite Bank of Nova Scotia and Real Matters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Real Matters 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 Real Matters will offset losses from the drop in Real Matters' 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 |
| Real Matters vs. Enghouse Systems | Real Matters vs. Pulse Seismic | Real Matters vs. Harvest Global REIT | Real Matters vs. International Zeolite 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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