Correlation Between Trimble and Novonix
Can any of the company-specific risk be diversified away by investing in both Trimble 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 Trimble and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trimble and Novonix, you can compare the effects of market volatilities on Trimble 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 Trimble with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimble and Novonix.
Diversification Opportunities for Trimble and Novonix
Very good diversification
The 3 months correlation between Trimble and Novonix is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix and Trimble 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 Trimble 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 Trimble i.e., Trimble and Novonix go up and down completely randomly.
Pair Corralation between Trimble and Novonix
Given the investment horizon of 90 days Trimble is expected to generate 1.59 times less return on investment than Novonix. But when comparing it to its historical volatility, Trimble is 4.97 times less risky than Novonix. It trades about 0.28 of its potential returns per unit of risk. Novonix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Novonix on October 23, 2024 and sell it today you would earn a total of 3.00 from holding Novonix or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Trimble vs. Novonix
Performance |
| Timeline |
| Trimble |
| Novonix |
Trimble and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trimble and Novonix
The main advantage of trading using opposite Trimble and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trimble 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.| Trimble vs. Fortive Corp | Trimble vs. MKS Instruments | Trimble vs. Novanta | Trimble vs. Vishay Precision Group |
| Novonix vs. FREYR Battery SA | Novonix vs. nVent Electric PLC | Novonix vs. Hubbell | Novonix vs. Advanced Energy Industries |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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