Correlation Between HOME DEPOT and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT 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 HOME DEPOT 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 HOME DEPOT CDR and Bank of Nova, you can compare the effects of market volatilities on HOME DEPOT 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 HOME DEPOT with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Bank of Nova Scotia.
Diversification Opportunities for HOME DEPOT and Bank of Nova Scotia
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HOME and Bank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT 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 HOME DEPOT 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 HOME DEPOT 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 HOME DEPOT i.e., HOME DEPOT and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between HOME DEPOT and Bank of Nova Scotia
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 1.45 times less return on investment than Bank of Nova Scotia. In addition to that, HOME DEPOT is 2.08 times more volatile than Bank of Nova. It trades about 0.19 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 7,219 in Bank of Nova on August 28, 2024 and sell it today you would earn a total of 680.00 from holding Bank of Nova or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Bank of Nova
Performance |
| Timeline |
| HOME DEPOT CDR |
| Bank of Nova Scotia |
HOME DEPOT and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Bank of Nova Scotia
The main advantage of trading using opposite HOME DEPOT and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT 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.| HOME DEPOT vs. Arbor Metals Corp | HOME DEPOT vs. Marimaca Copper Corp | HOME DEPOT vs. Data Communications Management | HOME DEPOT vs. Diamond Estates Wines |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |