Correlation Between Ur Energy and NORTHEAST UTILITIES

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

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

Diversification Opportunities for Ur Energy and NORTHEAST UTILITIES

0.34

Correlation Coefficient

Ur Energy  NORTHEAST UTILITIES

Weak diversification

The 3 months correlation between U9T and NORTHEAST is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ur Energy and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and Ur 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 Ur Energy are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of Ur Energy i.e., Ur Energy and NORTHEAST UTILITIES go up and down completely randomly.

Pair Corralation between Ur Energy and NORTHEAST UTILITIES

Assuming the 90 days horizon Ur Energy is expected to generate 2.57 times more return on investment than NORTHEAST UTILITIES. However, Ur Energy is 2.57 times more volatile than NORTHEAST UTILITIES. It trades about -0.04 of its potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about -0.13 per unit of risk. If you would invest  121.00  in Ur Energy on October 9, 2024 and sell it today you would lose (4.00) from holding Ur Energy or give up 3.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Ur Energy  vs.  NORTHEAST UTILITIES

Ur Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ur Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ur Energy reported solid returns over the last few months and may actually be approaching a breakup point.

NORTHEAST UTILITIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHEAST UTILITIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, NORTHEAST UTILITIES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ur Energy and NORTHEAST UTILITIES

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

The idea behind Ur Energy and NORTHEAST UTILITIES 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.