Correlation Between CVS Health and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health 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 CVS Health and The Bank of, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Bank of Nova Scotia.
Diversification Opportunities for CVS Health and Bank of Nova Scotia
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and Bank is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia and CVS Health 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 CVS Health 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 CVS Health i.e., CVS Health and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between CVS Health and Bank of Nova Scotia
If you would invest 114,800 in CVS Health on August 28, 2024 and sell it today you would earn a total of 7,000 from holding CVS Health or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. The Bank of
Performance |
| Timeline |
| CVS Health |
| Bank of Nova Scotia |
CVS Health and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Bank of Nova Scotia
The main advantage of trading using opposite CVS Health and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.| CVS Health vs. Glencore plc | CVS Health vs. iShares Trust | CVS Health vs. US Bancorp | CVS Health vs. American Express |
| Bank of Nova Scotia vs. Grupo Hotelero Santa | Bank of Nova Scotia vs. KB Home | Bank of Nova Scotia vs. Genworth Financial | Bank of Nova Scotia vs. McEwen Mining |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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