Correlation Between CVS Health and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health 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 CVS Health and The Bank of, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Bank of Nova Scotia.
Diversification Opportunities for CVS Health and Bank of Nova Scotia
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Bank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health 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 CVS Health 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 CVS Health 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 CVS Health i.e., CVS Health and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between CVS Health and Bank of Nova Scotia
Assuming the 90 days trading horizon CVS Health is expected to generate 2.27 times less return on investment than Bank of Nova Scotia. In addition to that, CVS Health is 1.97 times more volatile than The Bank of. It trades about 0.01 of its total potential returns per unit of risk. The Bank of is currently generating about 0.05 per unit of volatility. If you would invest 80,047 in The Bank of on December 1, 2024 and sell it today you would earn a total of 23,453 from holding The Bank of or generate 29.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CVS Health vs. The Bank of
Performance |
Timeline |
CVS Health |
Bank of Nova Scotia |
CVS Health and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Bank of Nova Scotia
The main advantage of trading using opposite CVS Health and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.CVS Health vs. McEwen Mining | CVS Health vs. Air Transport Services | CVS Health vs. Desarrolladora Homex SAB | CVS Health vs. The Home Depot |
Bank of Nova Scotia vs. Cognizant Technology Solutions | Bank of Nova Scotia vs. Southern Copper | Bank of Nova Scotia vs. Monster Beverage Corp | Bank of Nova Scotia vs. Martin Marietta Materials |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |