Correlation Between Cameco Corp and EnCore Energy

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

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

Diversification Opportunities for Cameco Corp and EnCore Energy

0.83

Correlation Coefficient

Cameco Corp  EnCore Energy

Very poor diversification

The 3 months correlation between Cameco and EnCore is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cameco 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 Cameco Corp 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 Cameco 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 Cameco Corp i.e., Cameco Corp and EnCore Energy go up and down completely randomly.

Pair Corralation between Cameco Corp and EnCore Energy

Considering the 90-day investment horizon Cameco Corp is expected to generate 0.98 times more return on investment than EnCore Energy. However, Cameco Corp is 1.02 times less risky than EnCore Energy. It trades about 0.27 of its potential returns per unit of risk. enCore Energy Corp is currently generating about 0.02 per unit of risk. If you would invest  4,841  in Cameco Corp on March 4, 2024 and sell it today you would earn a total of  710.00  from holding Cameco Corp or generate 14.67% return on investment over 90 days.

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

Cameco Corp  vs.  enCore Energy Corp

Cameco Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cameco Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Cameco Corp revealed solid returns over the last few months and may actually be approaching a breakup point.

enCore Energy Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish basic indicators, EnCore Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cameco Corp and EnCore Energy

The main advantage of trading using opposite Cameco Corp and EnCore Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cameco Corp 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 Cameco 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..