Correlation Between Vanguard World and Bank of Nova Scotia

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

Diversification Opportunities for Vanguard World and Bank of Nova Scotia

-0.03

Correlation Coefficient

Vanguard World  Bank of Nova Scotia

Good diversification

The 3 months correlation between Vanguard and Bank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard World 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 Vanguard World 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 Vanguard World 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 Vanguard World i.e., Vanguard World and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between Vanguard World and Bank of Nova Scotia

Assuming the 90 days trading horizon Vanguard World is expected to generate 1.1 times more return on investment than Bank of Nova Scotia. However, Vanguard World is 1.1 times more volatile than The Bank of. It trades about 0.08 of its potential returns per unit of risk. The Bank of is currently generating about -0.09 per unit of risk. If you would invest  519,080  in Vanguard World on December 30, 2024 and sell it today you would earn a total of  20,920  from holding Vanguard World or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vanguard World  vs.  The Bank of

Vanguard World

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard World are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Vanguard World is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bank of Nova Scotia

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bank of Nova Scotia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard World and Bank of Nova Scotia

The main advantage of trading using opposite Vanguard World and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard World 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.

The idea behind Vanguard World and The Bank of 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.