Correlation Between Bank of Nova Scotia and RT Minerals
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and RT Minerals 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 RT Minerals 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 RT Minerals Corp, you can compare the effects of market volatilities on Bank of Nova Scotia and RT Minerals 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 RT Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and RT Minerals.
Diversification Opportunities for Bank of Nova Scotia and RT Minerals
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and RTM is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and RT Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RT Minerals Corp 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 RT Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RT Minerals Corp has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and RT Minerals go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and RT Minerals
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 28.36 times less return on investment than RT Minerals. But when comparing it to its historical volatility, Bank of Nova is 64.35 times less risky than RT Minerals. It trades about 0.14 of its potential returns per unit of risk. RT Minerals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.00 in RT Minerals Corp on September 1, 2024 and sell it today you would earn a total of 10.00 from holding RT Minerals Corp or generate 500.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. RT Minerals Corp
Performance |
| Timeline |
| Bank of Nova Scotia |
| RT Minerals Corp |
Bank of Nova Scotia and RT Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and RT Minerals
The main advantage of trading using opposite Bank of Nova Scotia and RT Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, RT Minerals 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 RT Minerals will offset losses from the drop in RT Minerals' 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 |
| RT Minerals vs. First Majestic Silver | RT Minerals vs. Ivanhoe Energy | RT Minerals vs. Orezone Gold Corp | RT Minerals vs. Faraday Copper 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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