Correlation Between EnCore Energy and Sprott Physical

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

Diversification Opportunities for EnCore Energy and Sprott Physical

0.87

Correlation Coefficient

EnCore Energy  Sprott Physical

Very poor diversification

The 3 months correlation between EnCore and Sprott is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of EnCore Energy i.e., EnCore Energy and Sprott Physical go up and down completely randomly.

Pair Corralation between EnCore Energy and Sprott Physical

Allowing for the 90-day total investment horizon enCore Energy Corp is expected to generate 1.47 times more return on investment than Sprott Physical. However, EnCore Energy is 1.47 times more volatile than Sprott Physical Uranium. It trades about 0.06 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about 0.0 per unit of risk. If you would invest  327.00  in enCore Energy Corp on September 4, 2024 and sell it today you would earn a total of  34.00  from holding enCore Energy Corp or generate 10.4% return on investment over 90 days.

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

enCore Energy Corp  vs.  Sprott Physical Uranium

enCore Energy Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EnCore Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sprott Physical Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EnCore Energy and Sprott Physical

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

The idea behind enCore Energy Corp and Sprott Physical Uranium 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.