Correlation Between Xtra Energy and Novation Hldgs

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

By analyzing existing cross correlation between Xtra Energy Corp and Novation Hldgs, you can compare the effects of market volatilities on Xtra Energy and Novation Hldgs 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 Xtra Energy with a short position of Novation Hldgs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtra Energy and Novation Hldgs.

Diversification Opportunities for Xtra Energy and Novation Hldgs

0.0

Correlation Coefficient

Xtra Energy  Novation Hldgs

Pay attention - limited upside

The 3 months correlation between Xtra and Novation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Energy Corp and Novation Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novation Hldgs and Xtra Energy 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 Xtra Energy Corp are associated (or correlated) with Novation Hldgs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novation Hldgs has no effect on the direction of Xtra Energy i.e., Xtra Energy and Novation Hldgs go up and down completely randomly.

Pair Corralation between Xtra Energy and Novation Hldgs

If you would invest  14.00  in Xtra Energy Corp on September 18, 2024 and sell it today you would earn a total of  8.00  from holding Xtra Energy Corp or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xtra Energy Corp  vs.  Novation Hldgs

Xtra Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtra Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Xtra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Novation Hldgs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novation Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Novation Hldgs is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xtra Energy and Novation Hldgs

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

The idea behind Xtra Energy Corp and Novation Hldgs 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.