Correlation Between Atkore International and Novonix

Can any of the company-specific risk be diversified away by investing in both Atkore International 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 Atkore International and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atkore International Group and Novonix, you can compare the effects of market volatilities on Atkore International 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 Atkore International with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atkore International and Novonix.

Diversification Opportunities for Atkore International and Novonix

0.23

Correlation Coefficient

Atkore International  Novonix

Modest diversification

The 3 months correlation between Atkore and Novonix is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Atkore International Group and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix and Atkore International 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 Atkore International Group 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 Atkore International i.e., Atkore International and Novonix go up and down completely randomly.

Pair Corralation between Atkore International and Novonix

Given the investment horizon of 90 days Atkore International is expected to generate 2.85 times less return on investment than Novonix. But when comparing it to its historical volatility, Atkore International Group is 2.49 times less risky than Novonix. It trades about 0.07 of its potential returns per unit of risk. Novonix is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Novonix on September 5, 2024 and sell it today you would earn a total of  9.00  from holding Novonix or generate 23.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Atkore International Group  vs.  Novonix

Atkore International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atkore International Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Atkore International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Novonix

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Novonix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Novonix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atkore International and Novonix

The main advantage of trading using opposite Atkore International and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atkore International 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.

The idea behind Atkore International Group and Novonix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.