Correlation Between Energy Fuels and Ur Energy

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

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

Diversification Opportunities for Energy Fuels and Ur Energy

0.92

Correlation Coefficient

Energy Fuels  Ur Energy

Almost no diversification

The 3 months correlation between Energy and URE is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fuels and Ur Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ur Energy 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 Ur Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ur Energy has no effect on the direction of Energy Fuels i.e., Energy Fuels and Ur Energy go up and down completely randomly.

Pair Corralation between Energy Fuels and Ur Energy

Assuming the 90 days trading horizon Energy Fuels is expected to generate 1.62 times more return on investment than Ur Energy. However, Energy Fuels is 1.62 times more volatile than Ur Energy. It trades about 0.23 of its potential returns per unit of risk. Ur Energy is currently generating about 0.16 per unit of risk. If you would invest  586.00  in Energy Fuels on September 5, 2024 and sell it today you would earn a total of  394.00  from holding Energy Fuels or generate 67.24% return on investment over 90 days.

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

Energy Fuels  vs.  Ur Energy

Energy Fuels

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Energy Fuels displayed solid returns over the last few months and may actually be approaching a breakup point.

Ur Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ur Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Ur Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Fuels and Ur Energy

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

The idea behind Energy Fuels and Ur 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.