Correlation Between Timbercreek Financial and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp and Bank of Nova, you can compare the effects of market volatilities on Timbercreek Financial 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 Timbercreek Financial with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and Bank of Nova Scotia.
Diversification Opportunities for Timbercreek Financial and Bank of Nova Scotia
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Timbercreek and Bank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp 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 Timbercreek Financial 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 Timbercreek Financial Corp 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 Timbercreek Financial i.e., Timbercreek Financial and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Timbercreek Financial and Bank of Nova Scotia
Assuming the 90 days horizon Timbercreek Financial Corp is expected to under-perform the Bank of Nova Scotia. In addition to that, Timbercreek Financial is 2.41 times more volatile than Bank of Nova. It trades about -0.1 of its total potential returns per unit of risk. Bank of Nova is currently generating about 0.55 per unit of volatility. If you would invest 7,278 in Bank of Nova on August 30, 2024 and sell it today you would earn a total of 702.00 from holding Bank of Nova or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timbercreek Financial Corp vs. Bank of Nova
Performance |
| Timeline |
| Timbercreek Financial |
| Bank of Nova Scotia |
Timbercreek Financial and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timbercreek Financial and Bank of Nova Scotia
The main advantage of trading using opposite Timbercreek Financial and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timbercreek Financial 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.| Timbercreek Financial vs. Atrium Mortgage Investment | Timbercreek Financial vs. MCAN Mortgage | Timbercreek Financial vs. Fiera Capital | Timbercreek Financial vs. Firm Capital Mortgage |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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