Correlation Between Flux Power and Novonix
Can any of the company-specific risk be diversified away by investing in both Flux Power and Novonix 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 Flux Power and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flux Power Holdings and Novonix, you can compare the effects of market volatilities on Flux Power and Novonix 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 Flux Power with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Novonix.
Diversification Opportunities for Flux Power and Novonix
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flux and Novonix is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix and Flux Power 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 Flux Power Holdings are associated (or correlated) with Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix has no effect on the direction of Flux Power i.e., Flux Power and Novonix go up and down completely randomly.
Pair Corralation between Flux Power and Novonix
Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Novonix. But the stock apears to be less risky and, when comparing its historical volatility, Flux Power Holdings is 1.18 times less risky than Novonix. The stock trades about -0.01 of its potential returns per unit of risk. The Novonix is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Novonix on August 29, 2024 and sell it today you would lose (8.00) from holding Novonix or give up 12.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flux Power Holdings vs. Novonix
Performance |
| Timeline |
| Flux Power Holdings |
| Novonix |
Flux Power and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flux Power and Novonix
The main advantage of trading using opposite Flux Power and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flux Power position performs unexpectedly, Novonix 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 Novonix will offset losses from the drop in Novonix's long position.| Flux Power vs. Bloom Energy Corp | Flux Power vs. Eos Energy Enterprises | Flux Power vs. Sunrise New Energy | Flux Power vs. GrafTech International |
| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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