Correlation Between Ferroglobe PLC and Westwater Resources

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

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

Diversification Opportunities for Ferroglobe PLC and Westwater Resources

0.18

Correlation Coefficient

Ferroglobe PLC  Westwater Resources

Average diversification

The 3 months correlation between Ferroglobe and Westwater is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ferroglobe PLC and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources and Ferroglobe PLC 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 Ferroglobe PLC are associated (or correlated) with Westwater Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwater Resources has no effect on the direction of Ferroglobe PLC i.e., Ferroglobe PLC and Westwater Resources go up and down completely randomly.

Pair Corralation between Ferroglobe PLC and Westwater Resources

Considering the 90-day investment horizon Ferroglobe PLC is expected to generate 0.4 times more return on investment than Westwater Resources. However, Ferroglobe PLC is 2.51 times less risky than Westwater Resources. It trades about -0.01 of its potential returns per unit of risk. Westwater Resources is currently generating about -0.07 per unit of risk. If you would invest  377.00  in Ferroglobe PLC on December 29, 2024 and sell it today you would lose (13.00) from holding Ferroglobe PLC or give up 3.45% of portfolio value over 90 days.

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

Ferroglobe PLC  vs.  Westwater Resources

Ferroglobe PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferroglobe PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ferroglobe PLC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Westwater Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westwater Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ferroglobe PLC and Westwater Resources

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

The idea behind Ferroglobe PLC and Westwater Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.