Correlation Between Pan American and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Pan American 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 Pan American 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 Pan American Silver and Bank of Nova, you can compare the effects of market volatilities on Pan American 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 Pan American with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and Bank of Nova Scotia.
Diversification Opportunities for Pan American and Bank of Nova Scotia
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pan and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver 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 Pan American 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 Pan American Silver 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 Pan American i.e., Pan American and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Pan American and Bank of Nova Scotia
Assuming the 90 days trading horizon Pan American Silver is expected to under-perform the Bank of Nova Scotia. In addition to that, Pan American is 3.73 times more volatile than Bank of Nova. It trades about -0.05 of its total potential returns per unit of risk. Bank of Nova is currently generating about 0.71 per unit of volatility. If you would invest 7,244 in Bank of Nova on September 2, 2024 and sell it today you would earn a total of 741.00 from holding Bank of Nova or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan American Silver vs. Bank of Nova
Performance |
| Timeline |
| Pan American Silver |
| Bank of Nova Scotia |
Pan American and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan American and Bank of Nova Scotia
The main advantage of trading using opposite Pan American and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American 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.| Pan American vs. First Majestic Silver | Pan American vs. Ivanhoe Energy | Pan American vs. Orezone Gold Corp |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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