Correlation Between Ero Copper and EnCore Energy

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

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

Diversification Opportunities for Ero Copper and EnCore Energy

0.69

Correlation Coefficient

Ero Copper  EnCore Energy

Poor diversification

The 3 months correlation between Ero and EnCore is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and enCore Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enCore Energy Corp and Ero Copper 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 Ero Copper Corp are associated (or correlated) with EnCore Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enCore Energy Corp has no effect on the direction of Ero Copper i.e., Ero Copper and EnCore Energy go up and down completely randomly.

Pair Corralation between Ero Copper and EnCore Energy

Considering the 90-day investment horizon Ero Copper is expected to generate 2.23 times less return on investment than EnCore Energy. But when comparing it to its historical volatility, Ero Copper Corp is 1.08 times less risky than EnCore Energy. It trades about 0.02 of its potential returns per unit of risk. enCore Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  246.00  in enCore Energy Corp on September 14, 2024 and sell it today you would earn a total of  90.00  from holding enCore Energy Corp or generate 36.59% return on investment over 90 days.

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

Ero Copper Corp  vs.  enCore Energy Corp

Ero Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

enCore Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enCore Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EnCore Energy is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ero Copper and EnCore Energy

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

The idea behind Ero Copper Corp and enCore Energy 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 Anywhere module to track or share privately all of your investments from the convenience of any device.