Correlation Between Mastercard Incorporated and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Mastercard Incorporated 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 Mastercard Incorporated 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 Mastercard Incorporated and The Bank of, you can compare the effects of market volatilities on Mastercard Incorporated 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 Mastercard Incorporated with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard Incorporated and Bank of Nova Scotia.
Diversification Opportunities for Mastercard Incorporated and Bank of Nova Scotia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mastercard and Bank is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated 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 Mastercard Incorporated 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 Mastercard Incorporated 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 Mastercard Incorporated i.e., Mastercard Incorporated and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Mastercard Incorporated and Bank of Nova Scotia
Assuming the 90 days horizon Mastercard Incorporated is expected to generate 1.01 times more return on investment than Bank of Nova Scotia. However, Mastercard Incorporated is 1.01 times more volatile than The Bank of. It trades about 0.1 of its potential returns per unit of risk. The Bank of is currently generating about 0.08 per unit of risk. If you would invest 679,065 in Mastercard Incorporated on August 31, 2024 and sell it today you would earn a total of 413,621 from holding Mastercard Incorporated or generate 60.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard Incorporated vs. The Bank of
Performance |
| Timeline |
| Mastercard Incorporated |
| Bank of Nova Scotia |
Mastercard Incorporated and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard Incorporated and Bank of Nova Scotia
The main advantage of trading using opposite Mastercard Incorporated and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard Incorporated 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.| Mastercard Incorporated vs. Ameriprise Financial | Mastercard Incorporated vs. Grupo Sports World | Mastercard Incorporated vs. Applied Materials | Mastercard Incorporated vs. Hoteles City Express |
| Bank of Nova Scotia vs. CVS Health | Bank of Nova Scotia vs. Capital One Financial | Bank of Nova Scotia vs. Lloyds Banking Group | Bank of Nova Scotia vs. Monster Beverage Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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