Correlation Between Novonix and Hubbell
Can any of the company-specific risk be diversified away by investing in both Novonix and Hubbell 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 Hubbell 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 Hubbell, you can compare the effects of market volatilities on Novonix and Hubbell 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 Hubbell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Hubbell.
Diversification Opportunities for Novonix and Hubbell
Poor diversification
The 3 months correlation between Novonix and Hubbell is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell 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 Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of Novonix i.e., Novonix and Hubbell go up and down completely randomly.
Pair Corralation between Novonix and Hubbell
Considering the 90-day investment horizon Novonix Ltd ADR is expected to under-perform the Hubbell. In addition to that, Novonix is 2.06 times more volatile than Hubbell. It trades about -0.22 of its total potential returns per unit of risk. Hubbell is currently generating about -0.17 per unit of volatility. If you would invest 45,560 in Hubbell on December 2, 2024 and sell it today you would lose (8,401) from holding Hubbell or give up 18.44% 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. Hubbell
Performance |
Timeline |
Novonix Ltd ADR |
Hubbell |
Novonix and Hubbell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Novonix and Hubbell
The main advantage of trading using opposite Novonix and Hubbell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Hubbell 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 Hubbell will offset losses from the drop in Hubbell's long position.Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
Hubbell vs. Advanced Energy Industries | Hubbell vs. Enersys | Hubbell vs. Acuity Brands | Hubbell vs. Kimball Electronics |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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