Correlation Between Powerstorm Holdings and Novonix
Can any of the company-specific risk be diversified away by investing in both Powerstorm Holdings 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 Powerstorm Holdings and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powerstorm Holdings and Novonix Ltd ADR, you can compare the effects of market volatilities on Powerstorm Holdings 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 Powerstorm Holdings with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powerstorm Holdings and Novonix.
Diversification Opportunities for Powerstorm Holdings and Novonix
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Powerstorm and Novonix is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Powerstorm Holdings 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 Powerstorm Holdings 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 Powerstorm Holdings 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 Powerstorm Holdings i.e., Powerstorm Holdings and Novonix go up and down completely randomly.
Pair Corralation between Powerstorm Holdings and Novonix
Given the investment horizon of 90 days Powerstorm Holdings is expected to under-perform the Novonix. In addition to that, Powerstorm Holdings is 1.3 times more volatile than Novonix Ltd ADR. It trades about -0.03 of its total potential returns per unit of risk. Novonix Ltd ADR is currently generating about 0.02 per unit of volatility. If you would invest 208.00 in Novonix Ltd ADR on September 1, 2024 and sell it today you would lose (10.00) from holding Novonix Ltd ADR or give up 4.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Powerstorm Holdings vs. Novonix Ltd ADR
Performance |
| Timeline |
| Powerstorm Holdings |
| Novonix Ltd ADR |
Powerstorm Holdings and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powerstorm Holdings and Novonix
The main advantage of trading using opposite Powerstorm Holdings and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powerstorm Holdings 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.| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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