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 Ltd ADR 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

0.74

Correlation Coefficient

Novonix  Atkore International

Poor diversification

The 3 months correlation between Novonix and Atkore is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR 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 Ltd ADR 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

Considering the 90-day investment horizon Novonix Ltd ADR is expected to under-perform the Atkore International. But the stock apears to be less risky and, when comparing its historical volatility, Novonix Ltd ADR is 1.33 times less risky than Atkore International. The stock trades about -0.35 of its potential returns per unit of risk. The Atkore International Group is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  8,108  in Atkore International Group on December 2, 2024 and sell it today you would lose (1,958) from holding Atkore International Group or give up 24.15% of portfolio value over 90 days.

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

Novonix Ltd ADR  vs.  Atkore International Group

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.

Atkore International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atkore International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Ltd ADR 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.