Correlation Between Novonix and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both Novonix and FREYR Battery 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 Novonix and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novonix and FREYR Battery SA, you can compare the effects of market volatilities on Novonix and FREYR Battery 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 Novonix with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and FREYR Battery.
Diversification Opportunities for Novonix and FREYR Battery
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Novonix and FREYR is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Novonix and FREYR Battery SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREYR Battery SA and Novonix 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 Novonix are associated (or correlated) with FREYR Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREYR Battery SA has no effect on the direction of Novonix i.e., Novonix and FREYR Battery go up and down completely randomly.
Pair Corralation between Novonix and FREYR Battery
Assuming the 90 days horizon Novonix is expected to generate 0.86 times more return on investment than FREYR Battery. However, Novonix is 1.16 times less risky than FREYR Battery. It trades about -0.01 of its potential returns per unit of risk. FREYR Battery SA is currently generating about -0.02 per unit of risk. If you would invest 119.00 in Novonix on August 31, 2024 and sell it today you would lose (69.00) from holding Novonix or give up 57.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Novonix vs. FREYR Battery SA
Performance |
| Timeline |
| Novonix |
| FREYR Battery SA |
Novonix and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and FREYR Battery
The main advantage of trading using opposite Novonix and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, FREYR Battery 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 FREYR Battery will offset losses from the drop in FREYR Battery's long position.| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
| FREYR Battery vs. Solid Power | FREYR Battery vs. Enovix Corp | FREYR Battery vs. Microvast Holdings | FREYR Battery vs. LiCycle Holdings Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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