Correlation Between Helios Fairfax and Cameco Corp

Can any of the company-specific risk be diversified away by investing in both Helios Fairfax and Cameco Corp 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 Helios Fairfax and Cameco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Helios Fairfax Partners and Cameco Corp, you can compare the effects of market volatilities on Helios Fairfax and Cameco Corp 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 Helios Fairfax with a short position of Cameco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helios Fairfax and Cameco Corp.

Diversification Opportunities for Helios Fairfax and Cameco Corp

0.71

Correlation Coefficient

Helios Fairfax  Cameco Corp

Poor diversification

The 3 months correlation between Helios and Cameco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Helios Fairfax Partners and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp and Helios Fairfax 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 Helios Fairfax Partners are associated (or correlated) with Cameco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameco Corp has no effect on the direction of Helios Fairfax i.e., Helios Fairfax and Cameco Corp go up and down completely randomly.

Pair Corralation between Helios Fairfax and Cameco Corp

Assuming the 90 days trading horizon Helios Fairfax is expected to generate 3.21 times less return on investment than Cameco Corp. In addition to that, Helios Fairfax is 1.14 times more volatile than Cameco Corp. It trades about 0.06 of its total potential returns per unit of risk. Cameco Corp is currently generating about 0.23 per unit of volatility. If you would invest  5,475  in Cameco Corp on September 17, 2024 and sell it today you would earn a total of  2,253  from holding Cameco Corp or generate 41.15% return on investment over 90 days.

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

Helios Fairfax Partners  vs.  Cameco Corp

Helios Fairfax Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Fairfax Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Helios Fairfax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cameco Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cameco Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Cameco Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helios Fairfax and Cameco Corp

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

The idea behind Helios Fairfax Partners and Cameco 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.