Correlation Between Senvest Capital and Bank of Nova Scotia

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

Diversification Opportunities for Senvest Capital and Bank of Nova Scotia

-0.28

Correlation Coefficient

Senvest Capital  Bank of Nova Scotia

Very good diversification

The 3 months correlation between Senvest and Bank is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital 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 Senvest Capital 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between Senvest Capital and Bank of Nova Scotia

Assuming the 90 days trading horizon Senvest Capital is expected to generate 3.23 times more return on investment than Bank of Nova Scotia. However, Senvest Capital is 3.23 times more volatile than Bank of Nova. It trades about 0.24 of its potential returns per unit of risk. Bank of Nova is currently generating about 0.05 per unit of risk. If you would invest  28,500  in Senvest Capital on February 23, 2024 and sell it today you would earn a total of  4,000  from holding Senvest Capital or generate 14.04% return on investment over 90 days.

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

Senvest Capital  vs.  Bank of Nova

Senvest Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Bank of Nova Scotia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Nova are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bank of Nova Scotia is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Senvest Capital and Bank of Nova Scotia

The main advantage of trading using opposite Senvest Capital and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.