Correlation Between EnCore Energy and GoviEx Uranium

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

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

Diversification Opportunities for EnCore Energy and GoviEx Uranium

0.72

Correlation Coefficient

EnCore Energy  GoviEx Uranium

Poor diversification

The 3 months correlation between EnCore and GoviEx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and GoviEx Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoviEx Uranium and EnCore 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 enCore Energy Corp are associated (or correlated) with GoviEx Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoviEx Uranium has no effect on the direction of EnCore Energy i.e., EnCore Energy and GoviEx Uranium go up and down completely randomly.

Pair Corralation between EnCore Energy and GoviEx Uranium

Given the investment horizon of 90 days EnCore Energy is expected to generate 3.02 times less return on investment than GoviEx Uranium. But when comparing it to its historical volatility, enCore Energy Corp is 3.86 times less risky than GoviEx Uranium. It trades about 0.11 of its potential returns per unit of risk. GoviEx Uranium is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5.00  in GoviEx Uranium on September 4, 2024 and sell it today you would earn a total of  1.00  from holding GoviEx Uranium or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

enCore Energy Corp  vs.  GoviEx Uranium

enCore Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, EnCore Energy showed solid returns over the last few months and may actually be approaching a breakup point.

GoviEx Uranium

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GoviEx Uranium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GoviEx Uranium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnCore Energy and GoviEx Uranium

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

The idea behind enCore Energy Corp and GoviEx 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.