Correlation Between Metals Acquisition and EnCore Energy

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

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

Diversification Opportunities for Metals Acquisition and EnCore Energy

0.4

Correlation Coefficient

Metals Acquisition  EnCore Energy

Very weak diversification

The 3 months correlation between Metals and EnCore is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Metals Acquisition Limited 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 Metals Acquisition 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 Metals Acquisition Limited 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 Metals Acquisition i.e., Metals Acquisition and EnCore Energy go up and down completely randomly.

Pair Corralation between Metals Acquisition and EnCore Energy

Given the investment horizon of 90 days Metals Acquisition is expected to generate 1.5 times less return on investment than EnCore Energy. But when comparing it to its historical volatility, Metals Acquisition Limited is 1.41 times less risky than EnCore Energy. It trades about 0.12 of its potential returns per unit of risk. enCore Energy Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  386.00  in enCore Energy Corp on February 29, 2024 and sell it today you would earn a total of  92.00  from holding enCore Energy Corp or generate 23.83% return on investment over 90 days.

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

Metals Acquisition Limited  vs.  enCore Energy Corp

Metals Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Metals Acquisition disclosed 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 Metals Acquisition and EnCore Energy

The main advantage of trading using opposite Metals Acquisition and EnCore Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Acquisition 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 Metals Acquisition Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.