Correlation Between EnCore Energy and Denison Mines

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

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

Diversification Opportunities for EnCore Energy and Denison Mines

0.63

Correlation Coefficient

EnCore Energy  Denison Mines

Poor diversification

The 3 months correlation between EnCore and Denison is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp 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 EnCore Energy 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 enCore Energy Corp 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 EnCore Energy i.e., EnCore Energy and Denison Mines go up and down completely randomly.

Pair Corralation between EnCore Energy and Denison Mines

Allowing for the 90-day total investment horizon enCore Energy Corp is expected to under-perform the Denison Mines. But the etf apears to be less risky and, when comparing its historical volatility, enCore Energy Corp is 1.06 times less risky than Denison Mines. The etf trades about -0.1 of its potential returns per unit of risk. The Denison Mines Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Denison Mines Corp on August 23, 2024 and sell it today you would earn a total of  7.00  from holding Denison Mines Corp or generate 3.06% return on investment over 90 days.

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

enCore Energy Corp  vs.  Denison Mines Corp

enCore Energy Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 4 (%) 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.

Denison Mines Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnCore Energy and Denison Mines

The main advantage of trading using opposite EnCore Energy and Denison Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy 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 enCore Energy Corp 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.