Correlation Between EnCore Energy and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both EnCore Energy and NexGen 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 NexGen 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 NexGen Energy, you can compare the effects of market volatilities on EnCore Energy and NexGen 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and NexGen Energy.
Diversification Opportunities for EnCore Energy and NexGen Energy
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EnCore and NexGen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of EnCore Energy i.e., EnCore Energy and NexGen Energy go up and down completely randomly.
Pair Corralation between EnCore Energy and NexGen Energy
Allowing for the 90-day total investment horizon EnCore Energy is expected to generate 1.94 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, enCore Energy Corp is 1.02 times less risky than NexGen Energy. It trades about 0.02 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 660.00 in NexGen Energy on August 24, 2024 and sell it today you would earn a total of 173.00 from holding NexGen Energy or generate 26.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
enCore Energy Corp vs. NexGen Energy
Performance |
| Timeline |
| enCore Energy Corp |
| NexGen Energy |
EnCore Energy and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnCore Energy and NexGen Energy
The main advantage of trading using opposite EnCore Energy and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy position performs unexpectedly, NexGen 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 NexGen Energy will offset losses from the drop in NexGen 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 |
| NexGen Energy vs. Energy Fuels | NexGen Energy vs. Uranium Energy Corp | NexGen Energy vs. Cameco Corp | NexGen 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |