Correlation Between Bank of Nova Scotia and Globex Mining
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Globex Mining 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 Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Nova and Globex Mining Enterprises, you can compare the effects of market volatilities on Bank of Nova Scotia and Globex Mining 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 Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Globex Mining.
Diversification Opportunities for Bank of Nova Scotia and Globex Mining
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Globex is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises 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 Bank of Nova are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Globex Mining go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Globex Mining
Assuming the 90 days trading horizon Bank of Nova is expected to under-perform the Globex Mining. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Nova is 3.42 times less risky than Globex Mining. The stock trades about -0.17 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 109.00 in Globex Mining Enterprises on December 1, 2024 and sell it today you would earn a total of 35.00 from holding Globex Mining Enterprises or generate 32.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of Nova vs. Globex Mining Enterprises
Performance |
Timeline |
Bank of Nova Scotia |
Globex Mining Enterprises |
Bank of Nova Scotia and Globex Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of Nova Scotia and Globex Mining
The main advantage of trading using opposite Bank of Nova Scotia and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Globex Mining 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 Globex Mining will offset losses from the drop in Globex Mining's long position.Bank of Nova Scotia vs. Toronto Dominion Bank | Bank of Nova Scotia vs. Royal Bank of | Bank of Nova Scotia vs. Bank of Montreal | Bank of Nova Scotia vs. Canadian Imperial Bank |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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