Correlation Between Blue Moon and Uranium Energy

Can any of the company-specific risk be diversified away by investing in both Blue Moon and Uranium 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 Blue Moon and Uranium Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Blue Moon and Uranium Energy

0.83

Correlation Coefficient

Blue Moon  Uranium Energy

Very poor diversification

The 3 months correlation between Blue and Uranium is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Uranium Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uranium Energy Corp and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Uranium Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uranium Energy Corp has no effect on the direction of Blue Moon i.e., Blue Moon and Uranium Energy go up and down completely randomly.

Pair Corralation between Blue Moon and Uranium Energy

Assuming the 90 days horizon Blue Moon Metals is expected to generate 0.76 times more return on investment than Uranium Energy. However, Blue Moon Metals is 1.32 times less risky than Uranium Energy. It trades about -0.21 of its potential returns per unit of risk. Uranium Energy Corp is currently generating about -0.18 per unit of risk. If you would invest  28.00  in Blue Moon Metals on September 20, 2024 and sell it today you would lose (3.00) from holding Blue Moon Metals or give up 10.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Blue Moon Metals  vs.  Uranium Energy Corp

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Uranium Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uranium Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Uranium Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Moon and Uranium Energy

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

The idea behind Blue Moon Metals and Uranium Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.