Correlation Between Bank of Nova Scotia and Banco Bilbao
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Banco Bilbao 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 Banco Bilbao 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 Banco Bilbao Viscaya, you can compare the effects of market volatilities on Bank of Nova Scotia and Banco Bilbao 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 Banco Bilbao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Banco Bilbao.
Diversification Opportunities for Bank of Nova Scotia and Banco Bilbao
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Banco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Banco Bilbao Viscaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Viscaya 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 Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Viscaya has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Banco Bilbao go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Banco Bilbao
Considering the 90-day investment horizon Bank of Nova is expected to generate 0.6 times more return on investment than Banco Bilbao. However, Bank of Nova is 1.68 times less risky than Banco Bilbao. It trades about 0.14 of its potential returns per unit of risk. Banco Bilbao Viscaya is currently generating about 0.08 per unit of risk. If you would invest 5,406 in Bank of Nova on September 12, 2024 and sell it today you would earn a total of 177.00 from holding Bank of Nova or generate 3.27% 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. Banco Bilbao Viscaya
Performance |
| Timeline |
| Bank of Nova Scotia |
| Banco Bilbao Viscaya |
Bank of Nova Scotia and Banco Bilbao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Banco Bilbao
The main advantage of trading using opposite Bank of Nova Scotia and Banco Bilbao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Banco Bilbao 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 Banco Bilbao will offset losses from the drop in Banco Bilbao's long position.| Bank of Nova Scotia vs. Bank of America | Bank of Nova Scotia vs. Victory Integrity Smallmid Cap | Bank of Nova Scotia vs. Hilton Worldwide Holdings | Bank of Nova Scotia vs. NVIDIA |
| Banco Bilbao vs. Barclays PLC ADR | Banco Bilbao vs. ING Group NV | Banco Bilbao vs. Banco Santander SA | Banco Bilbao vs. HSBC Holdings PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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