Correlation Between Nova Lithium and EMCOR
Can any of the company-specific risk be diversified away by investing in both Nova Lithium and EMCOR 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 Nova Lithium and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lithium Corp and EMCOR Group, you can compare the effects of market volatilities on Nova Lithium and EMCOR 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 Nova Lithium with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lithium and EMCOR.
Diversification Opportunities for Nova Lithium and EMCOR
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nova and EMCOR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lithium Corp and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Nova Lithium 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 Nova Lithium Corp are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Nova Lithium i.e., Nova Lithium and EMCOR go up and down completely randomly.
Pair Corralation between Nova Lithium and EMCOR
Assuming the 90 days horizon Nova Lithium Corp is expected to generate 4.17 times more return on investment than EMCOR. However, Nova Lithium is 4.17 times more volatile than EMCOR Group. It trades about 0.22 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.41 per unit of risk. If you would invest 25.00 in Nova Lithium Corp on October 25, 2024 and sell it today you would earn a total of 8.00 from holding Nova Lithium Corp or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lithium Corp vs. EMCOR Group
Performance |
| Timeline |
| Nova Lithium Corp |
| EMCOR Group |
Nova Lithium and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lithium and EMCOR
The main advantage of trading using opposite Nova Lithium and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lithium position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| Nova Lithium vs. Axalta Coating Systems | Nova Lithium vs. Avient Corp | Nova Lithium vs. The Mosaic | Nova Lithium vs. National Vision Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |