Correlation Between Bank of Nova Scotia and East West
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and East West 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 East West 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 East West Bancorp, you can compare the effects of market volatilities on Bank of Nova Scotia and East West 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 East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and East West.
Diversification Opportunities for Bank of Nova Scotia and East West
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and East is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp 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 East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Bancorp has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and East West go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and East West
Considering the 90-day investment horizon Bank of Nova is expected to under-perform the East West. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Nova is 1.44 times less risky than East West. The stock trades about -0.23 of its potential returns per unit of risk. The East West Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,633 in East West Bancorp on January 26, 2024 and sell it today you would earn a total of 87.00 from holding East West Bancorp or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Nova vs. East West Bancorp
Performance |
| Timeline |
| Bank of Nova Scotia |
| East West Bancorp |
Bank of Nova Scotia and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and East West
The main advantage of trading using opposite Bank of Nova Scotia and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Bank of Nova Scotia vs. Toronto Dominion Bank | Bank of Nova Scotia vs. Royal Bank of | Bank of Nova Scotia vs. Canadian Imperial Bank | Bank of Nova Scotia vs. JPMorgan Chase Co |
| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |