Correlation Between NexGen Energy and Centrus Energy
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Centrus 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 NexGen Energy and Centrus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Centrus Energy, you can compare the effects of market volatilities on NexGen Energy and Centrus 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 NexGen Energy with a short position of Centrus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Centrus Energy.
Diversification Opportunities for NexGen Energy and Centrus Energy
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexGen and Centrus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Centrus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrus Energy and NexGen 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 NexGen Energy are associated (or correlated) with Centrus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrus Energy has no effect on the direction of NexGen Energy i.e., NexGen Energy and Centrus Energy go up and down completely randomly.
Pair Corralation between NexGen Energy and Centrus Energy
Considering the 90-day investment horizon NexGen Energy is expected to under-perform the Centrus Energy. But the stock apears to be less risky and, when comparing its historical volatility, NexGen Energy is 2.55 times less risky than Centrus Energy. The stock trades about -0.39 of its potential returns per unit of risk. The Centrus Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,187 in Centrus Energy on December 4, 2024 and sell it today you would earn a total of 213.00 from holding Centrus Energy or generate 2.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NexGen Energy vs. Centrus Energy
Performance |
Timeline |
NexGen Energy |
Centrus Energy |
NexGen Energy and Centrus Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NexGen Energy and Centrus Energy
The main advantage of trading using opposite NexGen Energy and Centrus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Centrus 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 Centrus Energy will offset losses from the drop in Centrus Energy's long position.NexGen Energy vs. Energy Fuels | NexGen Energy vs. Uranium Energy Corp | NexGen Energy vs. Cameco Corp | NexGen Energy vs. Ur Energy |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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