Correlation Between Novonix and Polar Power
Can any of the company-specific risk be diversified away by investing in both Novonix and Polar Power 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 Polar Power 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 Polar Power, you can compare the effects of market volatilities on Novonix and Polar Power 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 Polar Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Polar Power.
Diversification Opportunities for Novonix and Polar Power
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novonix and Polar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Power 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 Polar Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Power has no effect on the direction of Novonix i.e., Novonix and Polar Power go up and down completely randomly.
Pair Corralation between Novonix and Polar Power
Considering the 90-day investment horizon Novonix Ltd ADR is expected to generate 1.44 times more return on investment than Polar Power. However, Novonix is 1.44 times more volatile than Polar Power. It trades about 0.04 of its potential returns per unit of risk. Polar Power is currently generating about 0.05 per unit of risk. If you would invest 204.00 in Novonix Ltd ADR on August 30, 2024 and sell it today you would lose (6.00) from holding Novonix Ltd ADR or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonix Ltd ADR vs. Polar Power
Performance |
| Timeline |
| Novonix Ltd ADR |
| Polar Power |
Novonix and Polar Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonix and Polar Power
The main advantage of trading using opposite Novonix and Polar Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Polar Power 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 Polar Power will offset losses from the drop in Polar Power's long position.| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
| Polar Power vs. CBAK Energy Technology | Polar Power vs. Ocean Power Technologies | Polar Power vs. Enersys | Polar Power 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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