Correlation Between Bank of Nova Scotia and Telus Corp

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

Diversification Opportunities for Bank of Nova Scotia and Telus Corp

0.88

Correlation Coefficient

Bank of Nova Scotia  Telus Corp

Very poor diversification

The 3 months correlation between Bank and Telus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp 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 Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Telus Corp go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and Telus Corp

Considering the 90-day investment horizon Bank of Nova is expected to generate 0.5 times more return on investment than Telus Corp. However, Bank of Nova is 2.0 times less risky than Telus Corp. It trades about 0.31 of its potential returns per unit of risk. Telus Corp is currently generating about 0.06 per unit of risk. If you would invest  4,928  in Bank of Nova on May 6, 2025 and sell it today you would earn a total of  616.00  from holding Bank of Nova or generate 12.5% return on investment over 90 days.

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

Bank of Nova  vs.  Telus Corp

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 24 (%) 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.

Telus Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Telus Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Nova Scotia and Telus Corp

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

The idea behind Bank of Nova and Telus Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.