Correlation Between Pioneer Power and Westwater Resources

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

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

Diversification Opportunities for Pioneer Power and Westwater Resources

0.59

Correlation Coefficient

Pioneer Power  Westwater Resources

Very weak diversification

The 3 months correlation between Pioneer and Westwater is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources and Pioneer Power 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 Pioneer Power Solutions 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 Pioneer Power i.e., Pioneer Power and Westwater Resources go up and down completely randomly.

Pair Corralation between Pioneer Power and Westwater Resources

Given the investment horizon of 90 days Pioneer Power Solutions is expected to generate 0.94 times more return on investment than Westwater Resources. However, Pioneer Power Solutions is 1.06 times less risky than Westwater Resources. It trades about 0.11 of its potential returns per unit of risk. Westwater Resources is currently generating about 0.06 per unit of risk. If you would invest  472.00  in Pioneer Power Solutions on September 14, 2024 and sell it today you would earn a total of  108.00  from holding Pioneer Power Solutions or generate 22.88% return on investment over 90 days.

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

Pioneer Power Solutions  vs.  Westwater Resources

Pioneer Power Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Power Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Pioneer Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Westwater Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westwater Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Westwater Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pioneer Power and Westwater Resources

The main advantage of trading using opposite Pioneer Power and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Power 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 Pioneer Power Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.