Correlation Between Cameco Corp and Energy Fuels

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

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

Diversification Opportunities for Cameco Corp and Energy Fuels

0.07

Correlation Coefficient

Cameco Corp  Energy Fuels

Significant diversification

The 3 months correlation between Cameco and Energy is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cameco Corp and Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fuels 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 Energy Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fuels has no effect on the direction of Cameco Corp i.e., Cameco Corp and Energy Fuels go up and down completely randomly.

Pair Corralation between Cameco Corp and Energy Fuels

Considering the 90-day investment horizon Cameco Corp is expected to generate 0.8 times more return on investment than Energy Fuels. However, Cameco Corp is 1.24 times less risky than Energy Fuels. It trades about -0.03 of its potential returns per unit of risk. Energy Fuels is currently generating about -0.31 per unit of risk. If you would invest  4,675  in Cameco Corp on February 1, 2024 and sell it today you would lose (112.00) from holding Cameco Corp or give up 2.4% of portfolio value over 90 days.

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

Cameco Corp  vs.  Energy Fuels

Cameco Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cameco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Energy Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Fuels 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cameco Corp and Energy Fuels

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

The idea behind Cameco Corp and Energy Fuels 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 Global Correlations module to find global opportunities by holding instruments from different markets.