Correlation Between Energy Fuels and Sprott Physical

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

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

Diversification Opportunities for Energy Fuels and Sprott Physical

0.3

Correlation Coefficient

Energy Fuels  Sprott Physical

Weak diversification

The 3 months correlation between Energy and Sprott is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fuels and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium and Energy Fuels 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 Energy Fuels are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of Energy Fuels i.e., Energy Fuels and Sprott Physical go up and down completely randomly.

Pair Corralation between Energy Fuels and Sprott Physical

Given the investment horizon of 90 days Energy Fuels is expected to generate 1.7 times more return on investment than Sprott Physical. However, Energy Fuels is 1.7 times more volatile than Sprott Physical Uranium. It trades about 0.21 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about 0.04 per unit of risk. If you would invest  440.00  in Energy Fuels on September 3, 2024 and sell it today you would earn a total of  286.00  from holding Energy Fuels or generate 65.0% return on investment over 90 days.

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

Energy Fuels  vs.  Sprott Physical Uranium

Energy Fuels

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Energy Fuels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sprott Physical Uranium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Uranium are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Energy Fuels and Sprott Physical

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

The idea behind Energy Fuels and Sprott Physical Uranium 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.