Correlation Between Verizon Communications and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications 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 Verizon Communications CDR and Bank of Nova, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Bank of Nova Scotia.
Diversification Opportunities for Verizon Communications and Bank of Nova Scotia
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Verizon and Bank is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR 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 Verizon Communications 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 Verizon Communications CDR 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 Verizon Communications i.e., Verizon Communications and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Verizon Communications and Bank of Nova Scotia
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.09 times less return on investment than Bank of Nova Scotia. In addition to that, Verizon Communications is 1.43 times more volatile than Bank of Nova. It trades about 0.06 of its total potential returns per unit of risk. Bank of Nova is currently generating about 0.09 per unit of volatility. If you would invest 5,836 in Bank of Nova on August 29, 2024 and sell it today you would earn a total of 2,116 from holding Bank of Nova or generate 36.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications CDR vs. Bank of Nova
Performance |
| Timeline |
| Verizon Communications |
| Bank of Nova Scotia |
Verizon Communications and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Bank of Nova Scotia
The main advantage of trading using opposite Verizon Communications and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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.| Verizon Communications vs. Royal Helium | Verizon Communications vs. Excelsior Mining Corp | Verizon Communications vs. Vista Gold | Verizon Communications vs. TeraGo Inc |
| Bank of Nova Scotia vs. Microsoft Corp CDR | Bank of Nova Scotia vs. Apple Inc CDR | Bank of Nova Scotia vs. Alphabet Inc CDR | Bank of Nova Scotia vs. Amazon CDR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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