Correlation Between Bank of Nova Scotia and B of A

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Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and B of A 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 B of A 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 Bank Of America, you can compare the effects of market volatilities on Bank of Nova Scotia and B of A 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 B of A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and B of A.

Diversification Opportunities for Bank of Nova Scotia and B of A

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bank of Nova Scotia and B of A is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bank Of Nova and Bank Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of America 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 B of A. 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 America has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and B of A go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and B of A

Considering the 90-day investment horizon Bank of Nova Scotia is expected to generate 1.3 times less return on investment than B of A. But when comparing it to its historical volatility, Bank Of Nova is 1.52 times less risky than B of A. It trades about 0.04 of its potential returns per unit of risk. Bank Of America is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,365  in Bank Of America on June 28, 2022 and sell it today you would earn a total of  738.00  from holding Bank Of America or generate 31.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bank Of Nova  vs.  Bank Of America

 Performance (%) 
       Timeline  
Bank of Nova Scotia 
Bank of Nova Scotia Performance
0 of 100
Over the last 90 days Bank Of Nova has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bank of Nova Scotia Price Channel

Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Bank of Nova Scotia and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of Nova Scotia and B of A

The main advantage of trading using opposite Bank of Nova Scotia and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, B of A 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 B of A will offset losses from the drop in B of A's long position.
Bank of Nova Scotia vs. Kibush Capital Corp
The idea behind Bank Of Nova and Bank Of America 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.
B of A vs. Kibush Capital Corp
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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