Correlation Between Hayward Holdings and Novonix

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

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

Diversification Opportunities for Hayward Holdings and Novonix

0.56

Correlation Coefficient

Hayward Holdings  Novonix

Very weak diversification

The 3 months correlation between Hayward and Novonix is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hayward 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 Hayward 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 Hayward 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 Hayward Holdings i.e., Hayward Holdings and Novonix go up and down completely randomly.

Pair Corralation between Hayward Holdings and Novonix

Given the investment horizon of 90 days Hayward Holdings is expected to generate 0.39 times more return on investment than Novonix. However, Hayward Holdings is 2.55 times less risky than Novonix. It trades about -0.09 of its potential returns per unit of risk. Novonix Ltd ADR is currently generating about -0.09 per unit of risk. If you would invest  1,528  in Hayward Holdings on December 29, 2024 and sell it today you would lose (154.00) from holding Hayward Holdings or give up 10.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hayward Holdings  vs.  Novonix Ltd ADR

Hayward Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hayward Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Novonix Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novonix Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hayward Holdings and Novonix

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

The idea behind Hayward Holdings and Novonix Ltd ADR 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.