Correlation Between Novonix and Enersys

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

By analyzing existing cross correlation between Novonix and Enersys, you can compare the effects of market volatilities on Novonix and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Enersys.

Diversification Opportunities for Novonix and Enersys

-0.61

Correlation Coefficient

Novonix  Enersys

Excellent diversification

The 3 months correlation between Novonix and Enersys is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Novonix and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Novonix i.e., Novonix and Enersys go up and down completely randomly.

Pair Corralation between Novonix and Enersys

Assuming the 90 days horizon Novonix is expected to under-perform the Enersys. In addition to that, Novonix is 3.74 times more volatile than Enersys. It trades about -0.02 of its total potential returns per unit of risk. Enersys is currently generating about 0.05 per unit of volatility. If you would invest  9,347  in Enersys on December 26, 2024 and sell it today you would earn a total of  368.00  from holding Enersys or generate 3.94% return on investment over 90 days.

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

Novonix  vs.  Enersys

Novonix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novonix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Novonix is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Enersys

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enersys are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Novonix and Enersys

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

The idea behind Novonix and Enersys 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.