Correlation Between Novonix and Zinc8 Energy
Can any of the company-specific risk be diversified away by investing in both Novonix and Zinc8 Energy 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 Zinc8 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novonix and Zinc8 Energy Solutions, you can compare the effects of market volatilities on Novonix and Zinc8 Energy 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 Zinc8 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Zinc8 Energy.
Diversification Opportunities for Novonix and Zinc8 Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novonix and Zinc8 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Novonix and Zinc8 Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc8 Energy Solutions 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 Zinc8 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc8 Energy Solutions has no effect on the direction of Novonix i.e., Novonix and Zinc8 Energy go up and down completely randomly.
Pair Corralation between Novonix and Zinc8 Energy
Assuming the 90 days horizon Novonix is expected to under-perform the Zinc8 Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Novonix is 2.99 times less risky than Zinc8 Energy. The pink sheet trades about -0.29 of its potential returns per unit of risk. The Zinc8 Energy Solutions is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Zinc8 Energy Solutions on November 3, 2024 and sell it today you would earn a total of 3.80 from holding Zinc8 Energy Solutions or generate 118.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix vs. Zinc8 Energy Solutions
Performance |
| Timeline |
| Novonix |
| Zinc8 Energy Solutions |
Novonix and Zinc8 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Zinc8 Energy
The main advantage of trading using opposite Novonix and Zinc8 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Zinc8 Energy 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 Zinc8 Energy will offset losses from the drop in Zinc8 Energy's long position.| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
| Zinc8 Energy vs. Novonix | Zinc8 Energy vs. Exro Technologies | Zinc8 Energy vs. FuelPositive Corp | Zinc8 Energy vs. Novonix Ltd ADR |
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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