Correlation Between Novonix and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Novonix and FuelCell 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on Novonix and FuelCell 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and FuelCell Energy.
Diversification Opportunities for Novonix and FuelCell Energy
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Novonix and FuelCell is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Novonix i.e., Novonix and FuelCell Energy go up and down completely randomly.
Pair Corralation between Novonix and FuelCell Energy
Considering the 90-day investment horizon Novonix Ltd ADR is expected to generate 0.5 times more return on investment than FuelCell Energy. However, Novonix Ltd ADR is 2.02 times less risky than FuelCell Energy. It trades about -0.05 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.07 per unit of risk. If you would invest 210.00 in Novonix Ltd ADR on August 27, 2024 and sell it today you would lose (17.00) from holding Novonix Ltd ADR or give up 8.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. FuelCell Energy
Performance |
| Timeline |
| Novonix Ltd ADR |
| FuelCell Energy |
Novonix and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and FuelCell Energy
The main advantage of trading using opposite Novonix and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Eos Energy Enterprises | FuelCell Energy vs. Sunrise New Energy | FuelCell Energy vs. Flux Power 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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