Correlation Between WisdomTree Investments and Cameco Corp

Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and Cameco Corp 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 WisdomTree Investments and Cameco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree Investments and Cameco Corp, you can compare the effects of market volatilities on WisdomTree Investments and Cameco Corp 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 WisdomTree Investments with a short position of Cameco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and Cameco Corp.

Diversification Opportunities for WisdomTree Investments and Cameco Corp

0.32

Correlation Coefficient

WisdomTree Investments  Cameco Corp

Weak diversification

The 3 months correlation between WisdomTree and Cameco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp and WisdomTree Investments 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 WisdomTree Investments are associated (or correlated) with Cameco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameco Corp has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and Cameco Corp go up and down completely randomly.

Pair Corralation between WisdomTree Investments and Cameco Corp

Assuming the 90 days horizon WisdomTree Investments is expected to under-perform the Cameco Corp. But the stock apears to be less risky and, when comparing its historical volatility, WisdomTree Investments is 3.71 times less risky than Cameco Corp. The stock trades about -0.23 of its potential returns per unit of risk. The Cameco Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  0.90  in Cameco Corp on December 22, 2024 and sell it today you would lose (0.25) from holding Cameco Corp or give up 27.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

WisdomTree Investments  vs.  Cameco Corp

WisdomTree Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cameco Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cameco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WisdomTree Investments and Cameco Corp

The main advantage of trading using opposite WisdomTree Investments and Cameco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, Cameco Corp 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 Cameco Corp will offset losses from the drop in Cameco Corp's long position.

The idea behind WisdomTree Investments and Cameco Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.