Correlation Between Hubbell and Novonix
Can any of the company-specific risk be diversified away by investing in both Hubbell 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 Hubbell and Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hubbell and Novonix Ltd ADR, you can compare the effects of market volatilities on Hubbell 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 Hubbell with a short position of Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubbell and Novonix.
Diversification Opportunities for Hubbell and Novonix
Poor diversification
The 3 months correlation between Hubbell and Novonix is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hubbell and Novonix Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix Ltd ADR and Hubbell 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 Hubbell 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 Ltd ADR has no effect on the direction of Hubbell i.e., Hubbell and Novonix go up and down completely randomly.
Pair Corralation between Hubbell and Novonix
Given the investment horizon of 90 days Hubbell is expected to generate 0.21 times more return on investment than Novonix. However, Hubbell is 4.67 times less risky than Novonix. It trades about 0.0 of its potential returns per unit of risk. Novonix Ltd ADR is currently generating about -0.05 per unit of risk. If you would invest 45,918 in Hubbell on September 13, 2024 and sell it today you would lose (384.00) from holding Hubbell or give up 0.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hubbell vs. Novonix Ltd ADR
Performance |
Timeline |
Hubbell |
Novonix Ltd ADR |
Hubbell and Novonix Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hubbell and Novonix
The main advantage of trading using opposite Hubbell and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubbell 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.Hubbell vs. Advanced Energy Industries | Hubbell vs. Enersys | Hubbell vs. Acuity Brands | Hubbell vs. Kimball Electronics |
Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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