Correlation Between Bank of Nova Scotia and Catalyst Pharmaceuticals

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

Diversification Opportunities for Bank of Nova Scotia and Catalyst Pharmaceuticals

-0.66

Correlation Coefficient

Bank of Nova Scotia  Catalyst Pharmaceuticals

Excellent diversification

The 3 months correlation between Bank and Catalyst is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and Catalyst Pharmaceuticals

Considering the 90-day investment horizon Bank of Nova is expected to generate 0.34 times more return on investment than Catalyst Pharmaceuticals. However, Bank of Nova is 2.98 times less risky than Catalyst Pharmaceuticals. It trades about 0.29 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about -0.11 per unit of risk. If you would invest  4,955  in Bank of Nova on May 3, 2025 and sell it today you would earn a total of  589.00  from holding Bank of Nova or generate 11.89% return on investment over 90 days.

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

Bank of Nova  vs.  Catalyst Pharmaceuticals

Bank of Nova Scotia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Nova are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Nova Scotia may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bank of Nova Scotia and Catalyst Pharmaceuticals

The main advantage of trading using opposite Bank of Nova Scotia and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.

The idea behind Bank of Nova and Catalyst Pharmaceuticals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.