Correlation Between EnCore Energy and Laramide Resources

Can any of the company-specific risk be diversified away by investing in both EnCore Energy and Laramide Resources 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 Laramide Resources 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 Laramide Resources, you can compare the effects of market volatilities on EnCore Energy and Laramide Resources 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 Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and Laramide Resources.

Diversification Opportunities for EnCore Energy and Laramide Resources

0.38

Correlation Coefficient

EnCore Energy  Laramide Resources

Weak diversification

The 3 months correlation between EnCore and Laramide is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources 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 Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of EnCore Energy i.e., EnCore Energy and Laramide Resources go up and down completely randomly.

Pair Corralation between EnCore Energy and Laramide Resources

Given the investment horizon of 90 days enCore Energy Corp is expected to under-perform the Laramide Resources. But the stock apears to be less risky and, when comparing its historical volatility, enCore Energy Corp is 1.76 times less risky than Laramide Resources. The stock trades about -0.25 of its potential returns per unit of risk. The Laramide Resources is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Laramide Resources on September 23, 2024 and sell it today you would lose (9.00) from holding Laramide Resources or give up 11.69% 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.  Laramide Resources

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Laramide Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laramide Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Laramide Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnCore Energy and Laramide Resources

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

The idea behind enCore Energy Corp and Laramide Resources 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.