Correlation Between Bank of Nova Scotia and Sprott
Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Sprott 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 Sprott 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 Sprott Inc, you can compare the effects of market volatilities on Bank of Nova Scotia and Sprott 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 Sprott. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Sprott.
Diversification Opportunities for Bank of Nova Scotia and Sprott
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Sprott is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc 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 Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Sprott go up and down completely randomly.
Pair Corralation between Bank of Nova Scotia and Sprott
Assuming the 90 days trading horizon Bank of Nova Scotia is expected to generate 2.85 times less return on investment than Sprott. But when comparing it to its historical volatility, Bank of Nova is 3.59 times less risky than Sprott. It trades about 0.3 of its potential returns per unit of risk. Sprott Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,905 in Sprott Inc on August 28, 2025 and sell it today you would earn a total of 3,493 from holding Sprott Inc or generate 39.23% 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. Sprott Inc
Performance |
| Timeline |
| Bank of Nova Scotia |
| Sprott Inc |
Bank of Nova Scotia and Sprott Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Nova Scotia and Sprott
The main advantage of trading using opposite Bank of Nova Scotia and Sprott positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Sprott 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 Sprott will offset losses from the drop in Sprott's long position.| Bank of Nova Scotia vs. Data Communications Management | Bank of Nova Scotia vs. Aris Mining | Bank of Nova Scotia vs. A W FOOD | Bank of Nova Scotia vs. Capstone Mining Corp |
| Sprott vs. Magna Mining | Sprott vs. Dream Industrial Real | Sprott vs. Nicola Mining | Sprott vs. East Africa Metals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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