Correlation Between Visa and Novonix
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Novonix, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Novonix.
Diversification Opportunities for Visa and Novonix
Modest diversification
The 3 months correlation between Visa and Novonix is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix and Visa 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 Visa Class A 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 Visa i.e., Visa and Novonix go up and down completely randomly.
Pair Corralation between Visa and Novonix
Taking into account the 90-day investment horizon Visa is expected to generate 1.78 times less return on investment than Novonix. But when comparing it to its historical volatility, Visa Class A is 8.42 times less risky than Novonix. It trades about 0.33 of its potential returns per unit of risk. Novonix is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Novonix on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Novonix or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Novonix
Performance |
| Timeline |
| Visa Class A |
| Novonix |
Visa and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Novonix
The main advantage of trading using opposite Visa and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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