Correlation Between Adams Resources and Denison Mines
Can any of the company-specific risk be diversified away by investing in both Adams Resources and Denison Mines 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 Adams Resources and Denison Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Resources Energy and Denison Mines Corp, you can compare the effects of market volatilities on Adams Resources and Denison Mines 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 Adams Resources with a short position of Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Denison Mines.
Diversification Opportunities for Adams Resources and Denison Mines
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Denison is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp and Adams Resources 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 Adams Resources Energy are associated (or correlated) with Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Adams Resources i.e., Adams Resources and Denison Mines go up and down completely randomly.
Pair Corralation between Adams Resources and Denison Mines
Allowing for the 90-day total investment horizon Adams Resources Energy is expected to generate 0.94 times more return on investment than Denison Mines. However, Adams Resources Energy is 1.07 times less risky than Denison Mines. It trades about 0.05 of its potential returns per unit of risk. Denison Mines Corp is currently generating about 0.05 per unit of risk. If you would invest 2,716 in Adams Resources Energy on August 24, 2024 and sell it today you would earn a total of 1,008 from holding Adams Resources Energy or generate 37.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Resources Energy vs. Denison Mines Corp
Performance |
| Timeline |
| Adams Resources Energy |
| Denison Mines Corp |
Adams Resources and Denison Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Resources and Denison Mines
The main advantage of trading using opposite Adams Resources and Denison Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, Denison Mines 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 Denison Mines will offset losses from the drop in Denison Mines' long position.| Adams Resources vs. PrimeEnergy | Adams Resources vs. Barnwell Industries | Adams Resources vs. Acme United | Adams Resources vs. CKX Lands |
| Denison Mines vs. Energy Fuels | Denison Mines vs. enCore Energy Corp | Denison Mines vs. Ur Energy | Denison Mines vs. Cameco 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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