Correlation Between Bank of Nova Scotia and Zimtu Capital
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Zimtu Capital 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 Zimtu Capital 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 Zimtu Capital Corp, you can compare the effects of market volatilities on Bank of Nova Scotia and Zimtu Capital 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 Zimtu Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Zimtu Capital.
Diversification Opportunities for Bank of Nova Scotia and Zimtu Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Zimtu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Zimtu Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zimtu Capital 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 Zimtu Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zimtu Capital Corp has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Zimtu Capital go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Zimtu Capital
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 3.84 times less return on investment than Zimtu Capital. But when comparing it to its historical volatility, Bank of Nova is 18.1 times less risky than Zimtu Capital. It trades about 0.78 of its potential returns per unit of risk. Zimtu Capital Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Zimtu Capital Corp on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Zimtu Capital Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. Zimtu Capital Corp
Performance |
| Timeline |
| Bank of Nova Scotia |
| Zimtu Capital Corp |
Bank of Nova Scotia and Zimtu Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Zimtu Capital
The main advantage of trading using opposite Bank of Nova Scotia and Zimtu Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Zimtu Capital 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 Zimtu Capital will offset losses from the drop in Zimtu Capital'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 |
| Zimtu Capital vs. Commerce Resources Corp | Zimtu Capital vs. Great Atlantic Resources | Zimtu Capital vs. Lomiko Metals | Zimtu Capital vs. Focus Graphite |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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