Correlation Between Citigroup and Bank of Nova Scotia

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

Diversification Opportunities for Citigroup and Bank of Nova Scotia

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Citigroup and Bank of Nova Scotia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between Citigroup and Bank of Nova Scotia

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.69 times less return on investment than Bank of Nova Scotia. In addition to that, Citigroup is 1.62 times more volatile than Bank Of Nova. It trades about 0.01 of its total potential returns per unit of risk. Bank Of Nova is currently generating about 0.09 per unit of volatility. If you would invest  3,540  in Bank Of Nova on March 29, 2022 and sell it today you would earn a total of  2,318  from holding Bank Of Nova or generate 65.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Bank Of Nova

 Performance (%) 
      Timeline 
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0439
Payout Ratio
0.24
Last Split Factor
1:10
Forward Annual Dividend Rate
2.04
Dividend Date
2022-05-27
Ex Dividend Date
2022-04-29
Last Split Date
2011-05-09

Citigroup Price Channel

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 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

Citigroup and Bank of Nova Scotia Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and Bank of Nova Scotia

The main advantage of trading using opposite Citigroup and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup and Bank Of Nova 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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