Correlation Between Laramide Resources and Denison Mines

Can any of the company-specific risk be diversified away by investing in both Laramide Resources and Denison Mines 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 Laramide Resources and Denison Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Laramide Resources and Denison Mines

0.79

Correlation Coefficient

Laramide Resources  Denison Mines

Poor diversification

The 3 months correlation between Laramide and Denison is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Laramide Resources and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp and Laramide Resources 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 Laramide Resources are associated (or correlated) with Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Laramide Resources i.e., Laramide Resources and Denison Mines go up and down completely randomly.

Pair Corralation between Laramide Resources and Denison Mines

Assuming the 90 days trading horizon Laramide Resources is expected to generate 1.55 times more return on investment than Denison Mines. However, Laramide Resources is 1.55 times more volatile than Denison Mines Corp. It trades about 0.12 of its potential returns per unit of risk. Denison Mines Corp is currently generating about 0.18 per unit of risk. If you would invest  49.00  in Laramide Resources on September 16, 2024 and sell it today you would earn a total of  17.00  from holding Laramide Resources or generate 34.69% return on investment over 90 days.

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

Laramide Resources  vs.  Denison Mines Corp

Laramide Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laramide Resources are ranked lower than 9 (%) 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.

Denison Mines Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laramide Resources and Denison Mines

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

The idea behind Laramide Resources and Denison Mines 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.