Correlation Between Centrus Energy and EnCore Energy

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

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

Diversification Opportunities for Centrus Energy and EnCore Energy

0.42

Correlation Coefficient

Centrus Energy  EnCore Energy

Very weak diversification

The 3 months correlation between Centrus and EnCore is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Centrus Energy and enCore Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enCore Energy Corp and Centrus 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 Centrus Energy are associated (or correlated) with EnCore Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enCore Energy Corp has no effect on the direction of Centrus Energy i.e., Centrus Energy and EnCore Energy go up and down completely randomly.

Pair Corralation between Centrus Energy and EnCore Energy

Considering the 90-day investment horizon Centrus Energy is expected to under-perform the EnCore Energy. In addition to that, Centrus Energy is 3.29 times more volatile than enCore Energy Corp. It trades about -0.04 of its total potential returns per unit of risk. enCore Energy Corp is currently generating about 0.01 per unit of volatility. If you would invest  380.00  in enCore Energy Corp on September 2, 2024 and sell it today you would lose (2.00) from holding enCore Energy Corp or give up 0.53% of portfolio value over 90 days.

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

Centrus Energy  vs.  enCore Energy Corp

Centrus Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centrus Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Centrus Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

enCore Energy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish basic indicators, EnCore Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centrus Energy and EnCore Energy

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

The idea behind Centrus Energy and enCore Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.