Correlation Between Ur Energy and Denison Mines

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

By analyzing existing cross correlation between Ur Energy and Denison Mines Corp, you can compare the effects of market volatilities on Ur Energy and Denison Mines 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 Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ur Energy and Denison Mines.

Diversification Opportunities for Ur Energy and Denison Mines

0.89

Correlation Coefficient

Ur Energy  Denison Mines

Very poor diversification

The 3 months correlation between URE and Denison is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ur Energy and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Ur Energy i.e., Ur Energy and Denison Mines go up and down completely randomly.

Pair Corralation between Ur Energy and Denison Mines

Assuming the 90 days trading horizon Ur Energy is expected to generate 0.84 times more return on investment than Denison Mines. However, Ur Energy is 1.19 times less risky than Denison Mines. It trades about 0.03 of its potential returns per unit of risk. Denison Mines Corp is currently generating about -0.02 per unit of risk. If you would invest  160.00  in Ur Energy on October 20, 2024 and sell it today you would earn a total of  2.00  from holding Ur Energy or generate 1.25% return on investment over 90 days.

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

Ur Energy  vs.  Denison Mines Corp

Ur Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ur Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Denison Mines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ur Energy and Denison Mines

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

The idea behind Ur Energy and Denison Mines 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.