Correlation Between SP Global and Cameco Corp

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

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

Diversification Opportunities for SP Global and Cameco Corp

-0.42

Correlation Coefficient

SP Global  Cameco Corp

Very good diversification

The 3 months correlation between MHL and Cameco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp and SP Global 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 SP Global 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 SP Global i.e., SP Global and Cameco Corp go up and down completely randomly.

Pair Corralation between SP Global and Cameco Corp

Assuming the 90 days horizon SP Global is expected to under-perform the Cameco Corp. But the stock apears to be less risky and, when comparing its historical volatility, SP Global is 3.59 times less risky than Cameco Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Cameco Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.90  in Cameco Corp on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Cameco Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

SP Global  vs.  Cameco Corp

SP Global

Risk-Adjusted Performance

0 of 100

Weak

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

Cameco Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with SP Global and Cameco Corp

The main advantage of trading using opposite SP Global and Cameco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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 SP Global 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.