Correlation Between Magnum Goldcorp and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Magnum Goldcorp 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 Magnum Goldcorp 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 Magnum Goldcorp and Bank of Nova, you can compare the effects of market volatilities on Magnum Goldcorp 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 Magnum Goldcorp with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnum Goldcorp and Bank of Nova Scotia.
Diversification Opportunities for Magnum Goldcorp and Bank of Nova Scotia
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magnum and Bank is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Magnum Goldcorp 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 Magnum Goldcorp 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 Magnum Goldcorp 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 Magnum Goldcorp i.e., Magnum Goldcorp and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Magnum Goldcorp and Bank of Nova Scotia
Assuming the 90 days horizon Magnum Goldcorp is expected to generate 7.35 times more return on investment than Bank of Nova Scotia. However, Magnum Goldcorp is 7.35 times more volatile than Bank of Nova. It trades about 0.03 of its potential returns per unit of risk. Bank of Nova is currently generating about -0.18 per unit of risk. If you would invest 3.50 in Magnum Goldcorp on December 2, 2024 and sell it today you would earn a total of 0.00 from holding Magnum Goldcorp or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Magnum Goldcorp vs. Bank of Nova
Performance |
Timeline |
Magnum Goldcorp |
Bank of Nova Scotia |
Magnum Goldcorp and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magnum Goldcorp and Bank of Nova Scotia
The main advantage of trading using opposite Magnum Goldcorp and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnum Goldcorp 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.Magnum Goldcorp vs. Algonquin Power Utilities | Magnum Goldcorp vs. Quipt Home Medical | Magnum Goldcorp vs. SPoT Coffee | Magnum Goldcorp vs. Nicola Mining |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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