Correlation Between Berkshire Hathaway and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Bank of Nova Scotia 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 Berkshire Hathaway and Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway CDR and Bank of Nova, you can compare the effects of market volatilities on Berkshire Hathaway and Bank of Nova Scotia 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 Berkshire Hathaway with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Bank of Nova Scotia.
Diversification Opportunities for Berkshire Hathaway and Bank of Nova Scotia
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Berkshire and Bank is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Bank of Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia and Berkshire Hathaway 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 Berkshire Hathaway CDR are associated (or correlated) with Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Bank of Nova Scotia
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.91 times less return on investment than Bank of Nova Scotia. In addition to that, Berkshire Hathaway is 1.89 times more volatile than Bank of Nova. It trades about 0.15 of its total potential returns per unit of risk. Bank of Nova is currently generating about 0.56 per unit of volatility. If you would invest 7,199 in Bank of Nova on August 26, 2024 and sell it today you would earn a total of 692.00 from holding Bank of Nova or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Bank of Nova
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Bank of Nova Scotia |
Berkshire Hathaway and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Bank of Nova Scotia
The main advantage of trading using opposite Berkshire Hathaway and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.| Berkshire Hathaway vs. NVIDIA CDR | Berkshire Hathaway vs. Apple Inc CDR | Berkshire Hathaway vs. Microsoft Corp CDR | Berkshire Hathaway vs. Amazon CDR |
| 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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |