Correlation Between Sprott Physical and Centrus Energy

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

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

Diversification Opportunities for Sprott Physical and Centrus Energy

-0.06

Correlation Coefficient

Sprott Physical  Centrus Energy

Good diversification

The 3 months correlation between Sprott and Centrus is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Uranium and Centrus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrus Energy and Sprott Physical 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 Sprott Physical Uranium 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 Sprott Physical i.e., Sprott Physical and Centrus Energy go up and down completely randomly.

Pair Corralation between Sprott Physical and Centrus Energy

Assuming the 90 days horizon Sprott Physical is expected to generate 24.9 times less return on investment than Centrus Energy. But when comparing it to its historical volatility, Sprott Physical Uranium is 3.63 times less risky than Centrus Energy. It trades about 0.02 of its potential returns per unit of risk. Centrus Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sprott Physical Uranium  vs.  Centrus Energy

Sprott Physical Uranium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Uranium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Sprott Physical and Centrus Energy

The main advantage of trading using opposite Sprott Physical and Centrus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical 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.

The idea behind Sprott Physical Uranium and Centrus Energy 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.