Correlation Between First Asset and Scotia International
Can any of the company-specific risk be diversified away by investing in both First Asset and Scotia International 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 First Asset and Scotia International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Energy and Scotia International Equity, you can compare the effects of market volatilities on First Asset and Scotia International 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 First Asset with a short position of Scotia International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Scotia International.
Diversification Opportunities for First Asset and Scotia International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Scotia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Energy and Scotia International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotia International and First Asset 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 First Asset Energy are associated (or correlated) with Scotia International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotia International has no effect on the direction of First Asset i.e., First Asset and Scotia International go up and down completely randomly.
Pair Corralation between First Asset and Scotia International
Assuming the 90 days trading horizon First Asset is expected to generate 8.68 times less return on investment than Scotia International. In addition to that, First Asset is 1.65 times more volatile than Scotia International Equity. It trades about 0.01 of its total potential returns per unit of risk. Scotia International Equity is currently generating about 0.11 per unit of volatility. If you would invest 2,358 in Scotia International Equity on September 10, 2024 and sell it today you would earn a total of 418.00 from holding Scotia International Equity or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Asset Energy vs. Scotia International Equity
Performance |
| Timeline |
| First Asset Energy |
| Scotia International |
First Asset and Scotia International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and Scotia International
The main advantage of trading using opposite First Asset and Scotia International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, Scotia International 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 Scotia International will offset losses from the drop in Scotia International's long position.| First Asset vs. CI Gold Giants | First Asset vs. First Asset Tech | First Asset vs. CI Canada Lifeco | First Asset vs. Harvest Healthcare Leaders |
| Scotia International vs. Scotia Responsible Investing | Scotia International vs. Scotia Canadian Bond | Scotia International vs. Scotia Equity Index | Scotia International vs. NBI High Yield |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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