Correlation Between EnCore Energy and Centrus Energy
Can any of the company-specific risk be diversified away by investing in both EnCore Energy and Centrus Energy 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 EnCore Energy and Centrus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between enCore Energy Corp and Centrus Energy, you can compare the effects of market volatilities on EnCore Energy and Centrus Energy 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 EnCore Energy with a short position of Centrus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and Centrus Energy.
Diversification Opportunities for EnCore Energy and Centrus Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EnCore and Centrus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Centrus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrus Energy and EnCore 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 enCore Energy Corp are associated (or correlated) with Centrus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrus Energy has no effect on the direction of EnCore Energy i.e., EnCore Energy and Centrus Energy go up and down completely randomly.
Pair Corralation between EnCore Energy and Centrus Energy
Allowing for the 90-day total investment horizon EnCore Energy is expected to generate 14.82 times less return on investment than Centrus Energy. But when comparing it to its historical volatility, enCore Energy Corp is 1.73 times less risky than Centrus Energy. It trades about 0.03 of its potential returns per unit of risk. Centrus Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,661 in Centrus Energy on November 1, 2024 and sell it today you would earn a total of 1,824 from holding Centrus Energy or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
enCore Energy Corp vs. Centrus Energy
Performance |
| Timeline |
| enCore Energy Corp |
| Centrus Energy |
EnCore Energy and Centrus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnCore Energy and Centrus Energy
The main advantage of trading using opposite EnCore Energy and Centrus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy position performs unexpectedly, Centrus Energy 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 Centrus Energy will offset losses from the drop in Centrus Energy's long position.| EnCore Energy vs. Cameco Corp | EnCore Energy vs. Denison Mines Corp | EnCore Energy vs. Centrus Energy | EnCore Energy vs. NexGen Energy |
| Centrus Energy vs. Denison Mines Corp | Centrus Energy vs. Energy Fuels | Centrus Energy vs. enCore Energy Corp | Centrus Energy vs. Ur Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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