Correlation Between Energy Resources and Denison Mines

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

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

Diversification Opportunities for Energy Resources and Denison Mines

0.38

Correlation Coefficient

Energy Resources  Denison Mines

Weak diversification

The 3 months correlation between Energy and Denison is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources of and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp and Energy Resources 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 Resources of are associated (or correlated) with Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Energy Resources i.e., Energy Resources and Denison Mines go up and down completely randomly.

Pair Corralation between Energy Resources and Denison Mines

If you would invest  195.00  in Denison Mines Corp on January 24, 2024 and sell it today you would earn a total of  5.00  from holding Denison Mines Corp or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Energy Resources of  vs.  Denison Mines Corp

Energy Resources

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Energy Resources of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Energy Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Denison Mines Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Denison Mines is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Energy Resources and Denison Mines

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

The idea behind Energy Resources of and Denison Mines 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.