Correlation Between Pfizer and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer 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 Pfizer Inc and The Bank of, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Bank of Nova Scotia.
Diversification Opportunities for Pfizer and Bank of Nova Scotia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfizer and Bank is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc 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 Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Pfizer and Bank of Nova Scotia
Assuming the 90 days trading horizon Pfizer Inc is expected to under-perform the Bank of Nova Scotia. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.27 times less risky than Bank of Nova Scotia. The stock trades about -0.05 of its potential returns per unit of risk. The The Bank of is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 95,471 in The Bank of on September 4, 2024 and sell it today you would earn a total of 20,329 from holding The Bank of or generate 21.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. The Bank of
Performance |
| Timeline |
| Pfizer Inc |
| Bank of Nova Scotia |
Pfizer and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Bank of Nova Scotia
The main advantage of trading using opposite Pfizer and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. The Bank of | Pfizer vs. UnitedHealth Group Incorporated | Pfizer vs. Capital One Financial | Pfizer vs. Cognizant Technology Solutions |
| Bank of Nova Scotia vs. Monster Beverage Corp | Bank of Nova Scotia vs. Cognizant Technology Solutions | Bank of Nova Scotia vs. DXC Technology | Bank of Nova Scotia vs. Taiwan Semiconductor Manufacturing |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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