Correlation Between Impinj and Bank of Nova Scotia

Can any of the company-specific risk be diversified away by investing in both Impinj 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 Impinj 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 Impinj Inc and The Bank of, you can compare the effects of market volatilities on Impinj 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 Impinj with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impinj and Bank of Nova Scotia.

Diversification Opportunities for Impinj and Bank of Nova Scotia

-0.3

Correlation Coefficient

Impinj  Bank of Nova Scotia

Very good diversification

The 3 months correlation between Impinj and Bank is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Impinj 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 Impinj 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 Impinj 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 Impinj i.e., Impinj and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between Impinj and Bank of Nova Scotia

Assuming the 90 days horizon Impinj Inc is expected to generate 2.84 times more return on investment than Bank of Nova Scotia. However, Impinj is 2.84 times more volatile than The Bank of. It trades about 0.05 of its potential returns per unit of risk. The Bank of is currently generating about 0.06 per unit of risk. If you would invest  7,938  in Impinj Inc on October 22, 2024 and sell it today you would earn a total of  4,857  from holding Impinj Inc or generate 61.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Impinj Inc  vs.  The Bank of

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bank of Nova Scotia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bank of Nova Scotia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Impinj and Bank of Nova Scotia

The main advantage of trading using opposite Impinj and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impinj 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.

The idea behind Impinj Inc and The Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.