Correlation Between Novonix and Nexans SA
Can any of the company-specific risk be diversified away by investing in both Novonix and Nexans 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 Nexans 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 Nexans SA, you can compare the effects of market volatilities on Novonix and Nexans 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 Nexans SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Nexans SA.
Diversification Opportunities for Novonix and Nexans SA
Good diversification
The 3 months correlation between Novonix and Nexans is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans SA 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 Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Novonix i.e., Novonix and Nexans SA go up and down completely randomly.
Pair Corralation between Novonix and Nexans SA
Considering the 90-day investment horizon Novonix Ltd ADR is expected to generate 4.91 times more return on investment than Nexans SA. However, Novonix is 4.91 times more volatile than Nexans SA. It trades about 0.08 of its potential returns per unit of risk. Nexans SA is currently generating about -0.53 per unit of risk. If you would invest 184.00 in Novonix Ltd ADR on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Novonix Ltd ADR or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Nexans SA
Performance |
| Timeline |
| Novonix Ltd ADR |
| Nexans SA |
Novonix and Nexans SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Nexans SA
The main advantage of trading using opposite Novonix and Nexans SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Nexans 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 Nexans SA will offset losses from the drop in Nexans SA's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Nexans SA vs. AFC Energy plc | Nexans SA vs. Loop Energy | Nexans SA vs. Sunrise New Energy | Nexans SA vs. Energizer 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |