Correlation Between Standard Uranium and Energy Fuels

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

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

Diversification Opportunities for Standard Uranium and Energy Fuels

0.13

Correlation Coefficient

Standard Uranium  Energy Fuels

Average diversification

The 3 months correlation between Standard and Energy is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Standard Uranium and Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fuels and Standard Uranium 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 Standard Uranium are associated (or correlated) with Energy Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fuels has no effect on the direction of Standard Uranium i.e., Standard Uranium and Energy Fuels go up and down completely randomly.

Pair Corralation between Standard Uranium and Energy Fuels

Assuming the 90 days trading horizon Standard Uranium is expected to under-perform the Energy Fuels. In addition to that, Standard Uranium is 1.91 times more volatile than Energy Fuels. It trades about -0.08 of its total potential returns per unit of risk. Energy Fuels is currently generating about 0.05 per unit of volatility. If you would invest  712.00  in Energy Fuels on September 23, 2024 and sell it today you would earn a total of  51.00  from holding Energy Fuels or generate 7.16% return on investment over 90 days.

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

Standard Uranium  vs.  Energy Fuels

Standard Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Energy Fuels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Energy Fuels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Standard Uranium and Energy Fuels

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

The idea behind Standard Uranium and Energy Fuels 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..