Correlation Between Denison Mines and Centrus Energy

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Can any of the company-specific risk be diversified away by investing in both Denison Mines and Centrus 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 Denison Mines and Centrus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Denison Mines Corp and Centrus Energy, you can compare the effects of market volatilities on Denison Mines and Centrus 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 Denison Mines with a short position of Centrus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denison Mines and Centrus Energy.

Diversification Opportunities for Denison Mines and Centrus Energy

0.07
  Correlation Coefficient

Significant diversification

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

Pair Corralation between Denison Mines and Centrus Energy

Considering the 90-day investment horizon Denison Mines Corp is expected to generate 1.39 times more return on investment than Centrus Energy. However, Denison Mines is 1.39 times more volatile than Centrus Energy. It trades about 0.07 of its potential returns per unit of risk. Centrus Energy is currently generating about 0.06 per unit of risk. If you would invest  187.00  in Denison Mines Corp on December 29, 2023 and sell it today you would earn a total of  8.00  from holding Denison Mines Corp or generate 4.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Denison Mines Corp  vs.  Centrus Energy

 Performance 
       Timeline  
Denison Mines Corp 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.
Centrus Energy 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Centrus Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Denison Mines and Centrus Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Denison Mines and Centrus Energy

The main advantage of trading using opposite Denison Mines and Centrus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Denison Mines position performs unexpectedly, Centrus 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 Centrus Energy will offset losses from the drop in Centrus Energy's long position.
The idea behind Denison Mines Corp and Centrus Energy 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 Stocks Directory module to find actively traded stocks across global markets.

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