Correlation Between Bank of Nova Scotia and Intuit

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

Diversification Opportunities for Bank of Nova Scotia and Intuit

0.45

Correlation Coefficient

Bank of Nova Scotia  Intuit

Very weak diversification

The 3 months correlation between Bank and Intuit is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit Inc 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 Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Intuit go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and Intuit

Assuming the 90 days trading horizon The Bank of is expected to generate 2.14 times more return on investment than Intuit. However, Bank of Nova Scotia is 2.14 times more volatile than Intuit Inc. It trades about 0.13 of its potential returns per unit of risk. Intuit Inc is currently generating about -0.04 per unit of risk. If you would invest  101,800  in The Bank of on September 24, 2024 and sell it today you would earn a total of  8,200  from holding The Bank of or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

The Bank of  vs.  Intuit Inc

Bank of Nova Scotia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bank of Nova Scotia showed solid returns over the last few months and may actually be approaching a breakup point.

Intuit Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Intuit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Nova Scotia and Intuit

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

The idea behind The Bank of and Intuit Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.