Correlation Between Grupo Hotelero and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero 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 Grupo Hotelero 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 Grupo Hotelero Santa and The Bank of, you can compare the effects of market volatilities on Grupo Hotelero 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 Grupo Hotelero with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Bank of Nova Scotia.
Diversification Opportunities for Grupo Hotelero and Bank of Nova Scotia
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Bank is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa 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 Grupo Hotelero 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 Grupo Hotelero Santa 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 Grupo Hotelero i.e., Grupo Hotelero and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Bank of Nova Scotia
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 134.0 times less return on investment than Bank of Nova Scotia. But when comparing it to its historical volatility, Grupo Hotelero Santa is 3.0 times less risky than Bank of Nova Scotia. It trades about 0.0 of its potential returns per unit of risk. The Bank of is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 101,800 in The Bank of on August 29, 2024 and sell it today you would earn a total of 14,400 from holding The Bank of or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. The Bank of
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Bank of Nova Scotia |
Grupo Hotelero and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Bank of Nova Scotia
The main advantage of trading using opposite Grupo Hotelero and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero 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.| Grupo Hotelero vs. Samsung Electronics Co | Grupo Hotelero vs. Berkshire Hathaway | Grupo Hotelero vs. Banco Actinver SA | Grupo Hotelero vs. Baidu Inc |
| Bank of Nova Scotia vs. McEwen Mining | Bank of Nova Scotia vs. First Majestic Silver | Bank of Nova Scotia vs. KB Home | Bank of Nova Scotia vs. Micron Technology |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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