Correlation Between Energy Fuels and Western Uranium

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

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

Diversification Opportunities for Energy Fuels and Western Uranium

-0.5

Correlation Coefficient

Energy Fuels  Western Uranium

Very good diversification

The 3 months correlation between Energy and Western is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fuels and Western Uranium Vanadium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Uranium Vanadium 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 Western Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Uranium Vanadium has no effect on the direction of Energy Fuels i.e., Energy Fuels and Western Uranium go up and down completely randomly.

Pair Corralation between Energy Fuels and Western Uranium

Given the investment horizon of 90 days Energy Fuels is expected to generate 1.04 times more return on investment than Western Uranium. However, Energy Fuels is 1.04 times more volatile than Western Uranium Vanadium. It trades about 0.03 of its potential returns per unit of risk. Western Uranium Vanadium is currently generating about -0.08 per unit of risk. If you would invest  620.00  in Energy Fuels on September 9, 2024 and sell it today you would earn a total of  49.00  from holding Energy Fuels or generate 7.9% return on investment over 90 days.

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

Energy Fuels  vs.  Western Uranium Vanadium

Energy Fuels

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 14 (%) 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.

Western Uranium Vanadium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Uranium Vanadium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Energy Fuels and Western Uranium

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

The idea behind Energy Fuels and Western Uranium Vanadium 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.