Correlation Between Novonix and Electrovaya Common
Can any of the company-specific risk be diversified away by investing in both Novonix and Electrovaya Common 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 Electrovaya Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novonix Ltd ADR and Electrovaya Common Shares, you can compare the effects of market volatilities on Novonix and Electrovaya Common 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 Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Electrovaya Common.
Diversification Opportunities for Novonix and Electrovaya Common
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novonix and Electrovaya is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Ltd ADR are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Novonix i.e., Novonix and Electrovaya Common go up and down completely randomly.
Pair Corralation between Novonix and Electrovaya Common
Considering the 90-day investment horizon Novonix is expected to generate 1.34 times less return on investment than Electrovaya Common. In addition to that, Novonix is 2.44 times more volatile than Electrovaya Common Shares. It trades about 0.08 of its total potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.27 per unit of volatility. If you would invest 206.00 in Electrovaya Common Shares on September 1, 2024 and sell it today you would earn a total of 58.00 from holding Electrovaya Common Shares or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Electrovaya Common Shares
Performance |
| Timeline |
| Novonix Ltd ADR |
| Electrovaya Common Shares |
Novonix and Electrovaya Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Electrovaya Common
The main advantage of trading using opposite Novonix and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Electrovaya Common 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 Electrovaya Common will offset losses from the drop in Electrovaya Common's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Electrovaya Common vs. Bloom Energy Corp | Electrovaya Common vs. Microvast Holdings | Electrovaya Common vs. Solid Power | Electrovaya Common vs. FREYR Battery SA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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