Correlation Between Novonix and Legrand SA
Can any of the company-specific risk be diversified away by investing in both Novonix and Legrand SA 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 Legrand SA 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 Legrand SA ADR, you can compare the effects of market volatilities on Novonix and Legrand SA 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 Legrand SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Legrand SA.
Diversification Opportunities for Novonix and Legrand SA
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novonix and Legrand is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Legrand SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legrand SA ADR 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 Legrand SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legrand SA ADR has no effect on the direction of Novonix i.e., Novonix and Legrand SA go up and down completely randomly.
Pair Corralation between Novonix and Legrand SA
Considering the 90-day investment horizon Novonix Ltd ADR is expected to under-perform the Legrand SA. In addition to that, Novonix is 1.57 times more volatile than Legrand SA ADR. It trades about -0.23 of its total potential returns per unit of risk. Legrand SA ADR is currently generating about 0.22 per unit of volatility. If you would invest 2,005 in Legrand SA ADR on November 27, 2024 and sell it today you would earn a total of 207.00 from holding Legrand SA ADR or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Legrand SA ADR
Performance |
| Timeline |
| Novonix Ltd ADR |
| Legrand SA ADR |
Novonix and Legrand SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Legrand SA
The main advantage of trading using opposite Novonix and Legrand SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Legrand SA 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 Legrand SA will offset losses from the drop in Legrand SA's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Legrand SA vs. AFC Energy plc | Legrand SA vs. Loop Energy | Legrand SA vs. Sunrise New Energy | Legrand SA vs. Signify NV |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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