Correlation Between Novonix and Expion360

Can any of the company-specific risk be diversified away by investing in both Novonix and Expion360 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 Expion360 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 Expion360, you can compare the effects of market volatilities on Novonix and Expion360 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 Expion360. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Expion360.

Diversification Opportunities for Novonix and Expion360

0.73

Correlation Coefficient

Novonix  Expion360

Poor diversification

The 3 months correlation between Novonix and Expion360 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Expion360 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expion360 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 Expion360. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expion360 has no effect on the direction of Novonix i.e., Novonix and Expion360 go up and down completely randomly.

Pair Corralation between Novonix and Expion360

Considering the 90-day investment horizon Novonix is expected to generate 3.34 times less return on investment than Expion360. But when comparing it to its historical volatility, Novonix Ltd ADR is 1.57 times less risky than Expion360. It trades about 0.04 of its potential returns per unit of risk. Expion360 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Expion360 on May 2, 2025 and sell it today you would earn a total of  29.00  from holding Expion360 or generate 31.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Novonix Ltd ADR  vs.  Expion360

Novonix Ltd ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Novonix Ltd ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Novonix showed solid returns over the last few months and may actually be approaching a breakup point.

Expion360

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Expion360 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Expion360 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novonix and Expion360

The main advantage of trading using opposite Novonix and Expion360 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Expion360 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 Expion360 will offset losses from the drop in Expion360's long position.

The idea behind Novonix Ltd ADR and Expion360 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.