Correlation Between NeoVolta Warrant and Novonix

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

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

Diversification Opportunities for NeoVolta Warrant and Novonix

0.8

Correlation Coefficient

NeoVolta Warrant  Novonix

Very poor diversification

The 3 months correlation between NeoVolta and Novonix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NeoVolta Warrant 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 NeoVolta Warrant 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 NeoVolta Warrant 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 NeoVolta Warrant i.e., NeoVolta Warrant and Novonix go up and down completely randomly.

Pair Corralation between NeoVolta Warrant and Novonix

Assuming the 90 days horizon NeoVolta Warrant is expected to generate 2.34 times more return on investment than Novonix. However, NeoVolta Warrant is 2.34 times more volatile than Novonix Ltd ADR. It trades about -0.03 of its potential returns per unit of risk. Novonix Ltd ADR is currently generating about -0.13 per unit of risk. If you would invest  188.00  in NeoVolta Warrant on December 30, 2024 and sell it today you would lose (88.00) from holding NeoVolta Warrant or give up 46.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

NeoVolta Warrant  vs.  Novonix Ltd ADR

NeoVolta Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeoVolta Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing 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 NeoVolta Warrant and Novonix

The main advantage of trading using opposite NeoVolta Warrant and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeoVolta Warrant 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 NeoVolta Warrant 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.