Correlation Between Energy Fuels and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Energy Fuels 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 Energy Fuels and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Fuels and NexGen Energy, you can compare the effects of market volatilities on Energy Fuels 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 Energy Fuels with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fuels and NexGen Energy.
Diversification Opportunities for Energy Fuels and NexGen Energy
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Energy and NexGen is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fuels and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and Energy Fuels 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 Energy Fuels 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 Energy Fuels i.e., Energy Fuels and NexGen Energy go up and down completely randomly.
Pair Corralation between Energy Fuels and NexGen Energy
Given the investment horizon of 90 days Energy Fuels is expected to generate 1.27 times less return on investment than NexGen Energy. In addition to that, Energy Fuels is 1.19 times more volatile than NexGen Energy. It trades about 0.1 of its total potential returns per unit of risk. NexGen Energy is currently generating about 0.16 per unit of volatility. If you would invest 761.00 in NexGen Energy on August 27, 2024 and sell it today you would earn a total of 78.00 from holding NexGen Energy or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Fuels vs. NexGen Energy
Performance |
| Timeline |
| Energy Fuels |
| NexGen Energy |
Energy Fuels and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fuels and NexGen Energy
The main advantage of trading using opposite Energy Fuels and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fuels 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.| Energy Fuels vs. Uranium Energy Corp | Energy Fuels vs. Denison Mines Corp | Energy Fuels vs. Ur Energy | Energy Fuels 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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