Correlation Between Novonix and Atkore International

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

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

Diversification Opportunities for Novonix and Atkore International

0.23

Correlation Coefficient

Novonix  Atkore International

Modest diversification

The 3 months correlation between Novonix and Atkore is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Novonix and Atkore International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atkore International and Novonix 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 Novonix are associated (or correlated) with Atkore International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atkore International has no effect on the direction of Novonix i.e., Novonix and Atkore International go up and down completely randomly.

Pair Corralation between Novonix and Atkore International

Assuming the 90 days horizon Novonix is expected to generate 2.49 times more return on investment than Atkore International. However, Novonix is 2.49 times more volatile than Atkore International Group. It trades about 0.08 of its potential returns per unit of risk. Atkore International Group is currently generating about 0.07 per unit of risk. 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

Novonix  vs.  Atkore International Group

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.

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.

Pair Trading with Novonix and Atkore International

The main advantage of trading using opposite Novonix and Atkore International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Atkore International 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 Atkore International will offset losses from the drop in Atkore International's long position.

The idea behind Novonix and Atkore International Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..