Correlation Between Novonix and Magnis Energy
Can any of the company-specific risk be diversified away by investing in both Novonix and Magnis 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 Magnis 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 Magnis Energy Technologies, you can compare the effects of market volatilities on Novonix and Magnis 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 Magnis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Magnis Energy.
Diversification Opportunities for Novonix and Magnis Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Novonix and Magnis is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Magnis Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnis Energy Techno 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 Magnis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnis Energy Techno has no effect on the direction of Novonix i.e., Novonix and Magnis Energy go up and down completely randomly.
Pair Corralation between Novonix and Magnis Energy
Considering the 90-day investment horizon Novonix Ltd ADR is expected to under-perform the Magnis Energy. But the stock apears to be less risky and, when comparing its historical volatility, Novonix Ltd ADR is 3.29 times less risky than Magnis Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Magnis Energy Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Magnis Energy Technologies on November 3, 2024 and sell it today you would lose (0.30) from holding Magnis Energy Technologies or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Magnis Energy Technologies
Performance |
| Timeline |
| Novonix Ltd ADR |
| Magnis Energy Techno |
Novonix and Magnis Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Magnis Energy
The main advantage of trading using opposite Novonix and Magnis Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Magnis 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 Magnis Energy will offset losses from the drop in Magnis Energy's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Magnis Energy vs. Novonix Ltd ADR | Magnis Energy vs. Exro Technologies | Magnis Energy vs. Ilika plc | Magnis Energy vs. FuelPositive Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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