Correlation Between Energy Transfer and Denison Mines

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

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

Diversification Opportunities for Energy Transfer and Denison Mines

-0.52

Correlation Coefficient

Energy Transfer  Denison Mines

Excellent diversification

The 3 months correlation between Energy and Denison is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp and Energy Transfer 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 Transfer LP are associated (or correlated) with Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Energy Transfer i.e., Energy Transfer and Denison Mines go up and down completely randomly.

Pair Corralation between Energy Transfer and Denison Mines

Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.43 times more return on investment than Denison Mines. However, Energy Transfer LP is 2.35 times less risky than Denison Mines. It trades about -0.02 of its potential returns per unit of risk. Denison Mines Corp is currently generating about -0.16 per unit of risk. If you would invest  1,954  in Energy Transfer LP on November 28, 2024 and sell it today you would lose (62.00) from holding Energy Transfer LP or give up 3.17% of portfolio value over 90 days.

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

Energy Transfer LP  vs.  Denison Mines Corp

Energy Transfer LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Transfer LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Energy Transfer is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Denison Mines Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Energy Transfer and Denison Mines

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

The idea behind Energy Transfer LP and Denison Mines 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 Commodity Directory module to find actively traded commodities issued by global exchanges.