Correlation Between Denison Mines and Sprott Physical

Can any of the company-specific risk be diversified away by investing in both Denison Mines and Sprott Physical 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 Sprott Physical 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 Sprott Physical Uranium, you can compare the effects of market volatilities on Denison Mines and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denison Mines and Sprott Physical.

Diversification Opportunities for Denison Mines and Sprott Physical

0.75

Correlation Coefficient

Denison Mines  Sprott Physical

Poor diversification

The 3 months correlation between Denison and Sprott is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Denison Mines Corp and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of Denison Mines i.e., Denison Mines and Sprott Physical go up and down completely randomly.

Pair Corralation between Denison Mines and Sprott Physical

Assuming the 90 days trading horizon Denison Mines Corp is expected to generate 1.68 times more return on investment than Sprott Physical. However, Denison Mines is 1.68 times more volatile than Sprott Physical Uranium. It trades about 0.22 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about 0.12 per unit of risk. If you would invest  176.00  in Denison Mines Corp on April 21, 2025 and sell it today you would earn a total of  116.00  from holding Denison Mines Corp or generate 65.91% return on investment over 90 days.

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

Denison Mines Corp  vs.  Sprott Physical Uranium

Denison Mines Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Sprott Physical Uranium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Uranium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Sprott Physical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Denison Mines and Sprott Physical

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

The idea behind Denison Mines Corp and Sprott Physical Uranium 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.