Correlation Between Novonix and Espey Mfg
Can any of the company-specific risk be diversified away by investing in both Novonix and Espey Mfg 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 Espey Mfg 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 Espey Mfg Electronics, you can compare the effects of market volatilities on Novonix and Espey Mfg 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 Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Espey Mfg.
Diversification Opportunities for Novonix and Espey Mfg
Very poor diversification
The 3 months correlation between Novonix and Espey is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics 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 Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Novonix i.e., Novonix and Espey Mfg go up and down completely randomly.
Pair Corralation between Novonix and Espey Mfg
Considering the 90-day investment horizon Novonix Ltd ADR is expected to under-perform the Espey Mfg. In addition to that, Novonix is 2.02 times more volatile than Espey Mfg Electronics. It trades about -0.02 of its total potential returns per unit of risk. Espey Mfg Electronics is currently generating about 0.08 per unit of volatility. If you would invest 1,258 in Espey Mfg Electronics on August 26, 2024 and sell it today you would earn a total of 1,690 from holding Espey Mfg Electronics or generate 134.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Espey Mfg Electronics
Performance |
| Timeline |
| Novonix Ltd ADR |
| Espey Mfg Electronics |
Novonix and Espey Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Espey Mfg
The main advantage of trading using opposite Novonix and Espey Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Espey Mfg 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 Espey Mfg will offset losses from the drop in Espey Mfg's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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