Correlation Between Sprott Physical and Aura Energy
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Aura 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 Sprott Physical and Aura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Physical Uranium and Aura Energy Limited, you can compare the effects of market volatilities on Sprott Physical and Aura 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 Sprott Physical with a short position of Aura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Aura Energy.
Diversification Opportunities for Sprott Physical and Aura Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and Aura is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Uranium and Aura Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Energy Limited and Sprott Physical 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 Sprott Physical Uranium are associated (or correlated) with Aura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Energy Limited has no effect on the direction of Sprott Physical i.e., Sprott Physical and Aura Energy go up and down completely randomly.
Pair Corralation between Sprott Physical and Aura Energy
Assuming the 90 days horizon Sprott Physical is expected to generate 6.88 times less return on investment than Aura Energy. But when comparing it to its historical volatility, Sprott Physical Uranium is 7.5 times less risky than Aura Energy. It trades about 0.09 of its potential returns per unit of risk. Aura Energy Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8.10 in Aura Energy Limited on September 5, 2024 and sell it today you would lose (0.10) from holding Aura Energy Limited or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sprott Physical Uranium vs. Aura Energy Limited
Performance |
| Timeline |
| Sprott Physical Uranium |
| Aura Energy Limited |
Sprott Physical and Aura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Aura Energy
The main advantage of trading using opposite Sprott Physical and Aura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Aura 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 Aura Energy will offset losses from the drop in Aura Energy's long position.| Sprott Physical vs. Denison Mines Corp | Sprott Physical vs. Energy Fuels | Sprott Physical vs. enCore Energy Corp | Sprott Physical vs. Ur Energy |
| Aura Energy vs. Elevate Uranium | Aura Energy vs. Sprott Physical Uranium | Aura Energy vs. Energy Fuels | Aura Energy vs. ValOre Metals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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