Correlation Between Bank of Nova Scotia and JPMF Global

Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and JPMF Global 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 Bank of Nova Scotia and JPMF Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Bank of and JPMF Global Natural, you can compare the effects of market volatilities on Bank of Nova Scotia and JPMF Global 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 Bank of Nova Scotia with a short position of JPMF Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and JPMF Global.

Diversification Opportunities for Bank of Nova Scotia and JPMF Global

0.03

Correlation Coefficient

Bank of Nova Scotia  JPMF Global

Significant diversification

The 3 months correlation between Bank and JPMF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and JPMF Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMF Global Natural and Bank of Nova Scotia 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 The Bank of are associated (or correlated) with JPMF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMF Global Natural has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and JPMF Global go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and JPMF Global

Assuming the 90 days horizon The Bank of is expected to generate 1.19 times more return on investment than JPMF Global. However, Bank of Nova Scotia is 1.19 times more volatile than JPMF Global Natural. It trades about 0.14 of its potential returns per unit of risk. JPMF Global Natural is currently generating about -0.06 per unit of risk. If you would invest  4,860  in The Bank of on October 6, 2024 and sell it today you would earn a total of  364.00  from holding The Bank of or generate 7.49% return on investment over 90 days.

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

The Bank of  vs.  JPMF Global Natural

Bank of Nova Scotia

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bank of Nova Scotia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

JPMF Global Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMF Global Natural has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Bank of Nova Scotia and JPMF Global

The main advantage of trading using opposite Bank of Nova Scotia and JPMF Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, JPMF Global 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 JPMF Global will offset losses from the drop in JPMF Global's long position.

The idea behind The Bank of and JPMF Global Natural 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.