Correlation Between Advent Wireless and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Advent Wireless 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 Advent Wireless 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 Advent Wireless and Bank of Nova, you can compare the effects of market volatilities on Advent Wireless 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 Advent Wireless with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Wireless and Bank of Nova Scotia.
Diversification Opportunities for Advent Wireless and Bank of Nova Scotia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advent and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless 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 Advent Wireless 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 Advent Wireless 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 Advent Wireless i.e., Advent Wireless and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Advent Wireless and Bank of Nova Scotia
Assuming the 90 days horizon Advent Wireless is expected to generate 1.15 times less return on investment than Bank of Nova Scotia. In addition to that, Advent Wireless is 5.54 times more volatile than Bank of Nova. It trades about 0.02 of its total potential returns per unit of risk. Bank of Nova is currently generating about 0.14 per unit of volatility. If you would invest 7,165 in Bank of Nova on September 25, 2024 and sell it today you would earn a total of 543.00 from holding Bank of Nova or generate 7.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Advent Wireless vs. Bank of Nova
Performance |
Timeline |
Advent Wireless |
Bank of Nova Scotia |
Advent Wireless and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advent Wireless and Bank of Nova Scotia
The main advantage of trading using opposite Advent Wireless and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Wireless 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.Advent Wireless vs. Slate Grocery REIT | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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