Correlation Between Novonix and Novonix
Can any of the company-specific risk be diversified away by investing in both Novonix and Novonix 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 Novonix 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 Novonix, you can compare the effects of market volatilities on Novonix and Novonix 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 Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Novonix.
Diversification Opportunities for Novonix and Novonix
Very poor diversification
The 3 months correlation between Novonix and Novonix is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix 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 Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix has no effect on the direction of Novonix i.e., Novonix and Novonix go up and down completely randomly.
Pair Corralation between Novonix and Novonix
Considering the 90-day investment horizon Novonix Ltd ADR is expected to generate 0.97 times more return on investment than Novonix. However, Novonix Ltd ADR is 1.03 times less risky than Novonix. It trades about 0.03 of its potential returns per unit of risk. Novonix is currently generating about 0.02 per unit of risk. If you would invest 271.00 in Novonix Ltd ADR on August 29, 2024 and sell it today you would lose (2.00) from holding Novonix Ltd ADR or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Novonix
Performance |
| Timeline |
| Novonix Ltd ADR |
| Novonix |
Novonix and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Novonix
The main advantage of trading using opposite Novonix and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Novonix 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 Novonix will offset losses from the drop in Novonix's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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