Correlation Between Energizer Holdings and Novonix

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

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

Diversification Opportunities for Energizer Holdings and Novonix

0.59

Correlation Coefficient

Energizer Holdings  Novonix

Very weak diversification

The 3 months correlation between Energizer and Novonix is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix and Energizer Holdings 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 Energizer Holdings are associated (or correlated) with Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and Novonix go up and down completely randomly.

Pair Corralation between Energizer Holdings and Novonix

Considering the 90-day investment horizon Energizer Holdings is expected to generate 0.31 times more return on investment than Novonix. However, Energizer Holdings is 3.18 times less risky than Novonix. It trades about 0.03 of its potential returns per unit of risk. Novonix is currently generating about 0.0 per unit of risk. If you would invest  3,184  in Energizer Holdings on August 30, 2024 and sell it today you would earn a total of  642.00  from holding Energizer Holdings or generate 20.16% return on investment over 90 days.

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

Energizer Holdings  vs.  Novonix

Energizer Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Novonix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Novonix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Novonix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energizer Holdings and Novonix

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

The idea behind Energizer Holdings and Novonix 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.