Correlation Between Hayward Holdings and Novonix
Can any of the company-specific risk be diversified away by investing in both Hayward Holdings 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 Hayward Holdings and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hayward Holdings and Novonix Ltd ADR, you can compare the effects of market volatilities on Hayward Holdings 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 Hayward Holdings with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hayward Holdings and Novonix.
Diversification Opportunities for Hayward Holdings and Novonix
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hayward and Novonix is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hayward Holdings and Novonix Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix Ltd ADR and Hayward Holdings 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 Hayward 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 Ltd ADR has no effect on the direction of Hayward Holdings i.e., Hayward Holdings and Novonix go up and down completely randomly.
Pair Corralation between Hayward Holdings and Novonix
Given the investment horizon of 90 days Hayward Holdings is expected to generate 2.03 times less return on investment than Novonix. But when comparing it to its historical volatility, Hayward Holdings is 2.83 times less risky than Novonix. It trades about 0.05 of its potential returns per unit of risk. Novonix Ltd ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Novonix Ltd ADR on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Novonix Ltd ADR or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hayward Holdings vs. Novonix Ltd ADR
Performance |
| Timeline |
| Hayward Holdings |
| Novonix Ltd ADR |
Hayward Holdings and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hayward Holdings and Novonix
The main advantage of trading using opposite Hayward Holdings and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hayward Holdings 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.| Hayward Holdings vs. Kimball Electronics | Hayward Holdings vs. Enersys | Hayward Holdings vs. Espey Mfg Electronics | Hayward Holdings vs. Energizer Holdings |
| Novonix vs. ATT Inc | Novonix vs. Walt Disney | Novonix vs. Cisco Systems | Novonix vs. International Business Machines |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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