Correlation Between Bank of Nova Scotia and UPS CDR
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and UPS CDR 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 UPS CDR 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 UPS CDR, you can compare the effects of market volatilities on Bank of Nova Scotia and UPS CDR 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 UPS CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and UPS CDR.
Diversification Opportunities for Bank of Nova Scotia and UPS CDR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and UPS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and UPS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPS CDR 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 UPS CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPS CDR has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and UPS CDR go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and UPS CDR
Assuming the 90 days trading horizon Bank of Nova is expected to generate 0.62 times more return on investment than UPS CDR. However, Bank of Nova is 1.6 times less risky than UPS CDR. It trades about 0.08 of its potential returns per unit of risk. UPS CDR is currently generating about -0.02 per unit of risk. If you would invest 6,016 in Bank of Nova on August 31, 2024 and sell it today you would earn a total of 1,969 from holding Bank of Nova or generate 32.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank of Nova vs. UPS CDR
Performance |
| Timeline |
| Bank of Nova Scotia |
| UPS CDR |
Bank of Nova Scotia and UPS CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and UPS CDR
The main advantage of trading using opposite Bank of Nova Scotia and UPS CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, UPS CDR 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 UPS CDR will offset losses from the drop in UPS CDR's long position.| Bank of Nova Scotia vs. iShares Canadian HYBrid | Bank of Nova Scotia vs. Brompton European Dividend | Bank of Nova Scotia vs. Solar Alliance Energy | Bank of Nova Scotia vs. PHN Multi Style All Cap |
| UPS CDR vs. Baylin Technologies | UPS CDR vs. Supremex | UPS CDR vs. iShares Canadian HYBrid | UPS CDR vs. Brompton European Dividend |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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