Correlation Between Tesla and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla 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 Tesla Inc and The Bank of, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Bank of Nova Scotia.
Diversification Opportunities for Tesla and Bank of Nova Scotia
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tesla and Bank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc 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 Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Tesla and Bank of Nova Scotia
Assuming the 90 days trading horizon Tesla Inc is expected to generate 2.35 times more return on investment than Bank of Nova Scotia. However, Tesla is 2.35 times more volatile than The Bank of. It trades about 0.28 of its potential returns per unit of risk. The Bank of is currently generating about 0.14 per unit of risk. If you would invest 439,507 in Tesla Inc on September 18, 2024 and sell it today you would earn a total of 490,174 from holding Tesla Inc or generate 111.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tesla Inc vs. The Bank of
Performance |
Timeline |
Tesla Inc |
Bank of Nova Scotia |
Tesla and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tesla and Bank of Nova Scotia
The main advantage of trading using opposite Tesla and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.Tesla vs. The Bank of | Tesla vs. First Republic Bank | Tesla vs. Grupo Sports World | Tesla vs. Monster Beverage Corp |
Bank of Nova Scotia vs. HSBC Holdings plc | Bank of Nova Scotia vs. UBS Group AG | Bank of Nova Scotia vs. ING Groep NV | Bank of Nova Scotia vs. Barclays PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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