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
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Novonix and Atkore is 0.85. 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. In addition to that, Novonix is 1.32 times more volatile than Atkore International Group. It trades about -0.1 of its total potential returns per unit of risk. Atkore International Group is currently generating about -0.11 per unit of volatility. If you would invest 8,234 in Atkore International Group on December 28, 2024 and sell it today you would lose (1,939) from holding Atkore International Group or give up 23.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Novonix Ltd ADR vs. Atkore International Group
Performance |
Timeline |
Novonix Ltd ADR |
Atkore International |
Novonix and Atkore International Volatility Contrast
Predicted Return Density |
Returns |
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.Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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