Correlation Between Leons Furniture and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Leons Furniture 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 Leons Furniture 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 Leons Furniture Limited and Bank of Nova, you can compare the effects of market volatilities on Leons Furniture 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 Leons Furniture with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Bank of Nova Scotia.
Diversification Opportunities for Leons Furniture and Bank of Nova Scotia
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leons and Bank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited 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 Leons Furniture 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 Leons Furniture Limited 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 Leons Furniture i.e., Leons Furniture and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Leons Furniture and Bank of Nova Scotia
Assuming the 90 days trading horizon Leons Furniture Limited is expected to under-perform the Bank of Nova Scotia. In addition to that, Leons Furniture is 1.66 times more volatile than Bank of Nova. It trades about -0.11 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Bank of Nova
Performance |
| Timeline |
| Leons Furniture |
| Bank of Nova Scotia |
Leons Furniture and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Bank of Nova Scotia
The main advantage of trading using opposite Leons Furniture and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture 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.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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