Correlation Between Centrus Energy and Isoenergy

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

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

Diversification Opportunities for Centrus Energy and Isoenergy

0.45

Correlation Coefficient

Centrus Energy  Isoenergy

Very weak diversification

The 3 months correlation between Centrus and Isoenergy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Centrus Energy and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy 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 Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of Centrus Energy i.e., Centrus Energy and Isoenergy go up and down completely randomly.

Pair Corralation between Centrus Energy and Isoenergy

Considering the 90-day investment horizon Centrus Energy is expected to generate 2.31 times more return on investment than Isoenergy. However, Centrus Energy is 2.31 times more volatile than Isoenergy. It trades about 0.17 of its potential returns per unit of risk. Isoenergy is currently generating about 0.03 per unit of risk. If you would invest  3,953  in Centrus Energy on September 13, 2024 and sell it today you would earn a total of  3,558  from holding Centrus Energy or generate 90.01% return on investment over 90 days.

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

Centrus Energy  vs.  Isoenergy

Centrus Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centrus Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Centrus Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Isoenergy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Isoenergy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Isoenergy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Centrus Energy and Isoenergy

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

The idea behind Centrus Energy and Isoenergy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.