Correlation Between Bank of Nova Scotia and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Banco Santander 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 Santander 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 Santander SA, you can compare the effects of market volatilities on Bank of Nova Scotia and Banco Santander 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 Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Banco Santander.
Diversification Opportunities for Bank of Nova Scotia and Banco Santander
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Banco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Banco Santander SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander SA 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 Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander SA has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Banco Santander go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Banco Santander
Considering the 90-day investment horizon Bank of Nova is expected to generate 0.59 times more return on investment than Banco Santander. However, Bank of Nova is 1.7 times less risky than Banco Santander. It trades about 0.14 of its potential returns per unit of risk. Banco Santander SA is currently generating about -0.16 per unit of risk. If you would invest 5,304 in Bank of Nova on September 4, 2024 and sell it today you would earn a total of 174.00 from holding Bank of Nova or generate 3.28% 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 Santander SA
Performance |
| Timeline |
| Bank of Nova Scotia |
| Banco Santander SA |
Bank of Nova Scotia and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Banco Santander
The main advantage of trading using opposite Bank of Nova Scotia and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Banco Santander 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 Santander will offset losses from the drop in Banco Santander's long position.| Bank of Nova Scotia vs. Toronto Dominion Bank | Bank of Nova Scotia vs. Royal Bank of | Bank of Nova Scotia vs. Canadian Imperial Bank | Bank of Nova Scotia vs. JPMorgan Chase Co |
| Banco Santander vs. Barclays PLC ADR | Banco Santander vs. ING Group NV | Banco Santander vs. HSBC Holdings PLC | Banco Santander vs. Natwest Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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