Correlation Between EnCore Energy and Aura Energy

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

Diversification Opportunities for EnCore Energy and Aura Energy

0.74

Correlation Coefficient

EnCore Energy  Aura Energy

Poor diversification

The 3 months correlation between EnCore and Aura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Aura Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Energy Limited 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 Aura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Energy Limited has no effect on the direction of EnCore Energy i.e., EnCore Energy and Aura Energy go up and down completely randomly.

Pair Corralation between EnCore Energy and Aura Energy

Allowing for the 90-day total investment horizon enCore Energy Corp is expected to under-perform the Aura Energy. In addition to that, EnCore Energy is 1.23 times more volatile than Aura Energy Limited. It trades about -0.14 of its total potential returns per unit of risk. Aura Energy Limited is currently generating about 0.01 per unit of volatility. If you would invest  9.00  in Aura Energy Limited on December 26, 2024 and sell it today you would lose (0.50) from holding Aura Energy Limited or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

enCore Energy Corp  vs.  Aura Energy Limited

enCore Energy Corp

Risk-Adjusted Performance

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 Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Aura Energy Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Energy Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Aura Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EnCore Energy and Aura Energy

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

The idea behind enCore Energy Corp and Aura Energy Limited 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.