Correlation Between Polar Power and Novonix
Can any of the company-specific risk be diversified away by investing in both Polar Power 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 Polar Power and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Power and Novonix Ltd ADR, you can compare the effects of market volatilities on Polar Power 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 Polar Power with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Power and Novonix.
Diversification Opportunities for Polar Power and Novonix
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polar and Novonix is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and Novonix Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix Ltd ADR and Polar Power 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 Polar Power 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 Ltd ADR has no effect on the direction of Polar Power i.e., Polar Power and Novonix go up and down completely randomly.
Pair Corralation between Polar Power and Novonix
Given the investment horizon of 90 days Polar Power is expected to generate 1.15 times more return on investment than Novonix. However, Polar Power is 1.15 times more volatile than Novonix Ltd ADR. It trades about 0.03 of its potential returns per unit of risk. Novonix Ltd ADR is currently generating about 0.02 per unit of risk. If you would invest 319.00 in Polar Power on August 27, 2024 and sell it today you would earn a total of 19.00 from holding Polar Power or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Power vs. Novonix Ltd ADR
Performance |
| Timeline |
| Polar Power |
| Novonix Ltd ADR |
Polar Power and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Power and Novonix
The main advantage of trading using opposite Polar Power and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Power 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.| Polar Power vs. Plug Power | Polar Power vs. Microvast Holdings | Polar Power vs. Solid Power | Polar Power vs. CBAK Energy Technology |
| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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