Correlation Between EnCore Energy and Fortune Bay

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

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

Diversification Opportunities for EnCore Energy and Fortune Bay

0.34

Correlation Coefficient

EnCore Energy  Fortune Bay

Weak diversification

The 3 months correlation between EnCore and Fortune is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Fortune Bay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Bay Corp and EnCore Energy 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 enCore Energy Corp are associated (or correlated) with Fortune Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Bay Corp has no effect on the direction of EnCore Energy i.e., EnCore Energy and Fortune Bay go up and down completely randomly.

Pair Corralation between EnCore Energy and Fortune Bay

Given the investment horizon of 90 days enCore Energy Corp is expected to under-perform the Fortune Bay. But the stock apears to be less risky and, when comparing its historical volatility, enCore Energy Corp is 1.24 times less risky than Fortune Bay. The stock trades about -0.03 of its potential returns per unit of risk. The Fortune Bay Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Fortune Bay Corp on September 15, 2024 and sell it today you would lose (1.00) from holding Fortune Bay Corp or give up 3.85% of portfolio value over 90 days.

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

enCore Energy Corp  vs.  Fortune Bay Corp

enCore Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enCore Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fortune Bay Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Bay Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fortune Bay is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EnCore Energy and Fortune Bay

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

The idea behind enCore Energy Corp and Fortune Bay 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.