Correlation Between Power Metal and Wickes Group

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

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

Diversification Opportunities for Power Metal and Wickes Group

0.36

Correlation Coefficient

Power Metal  Wickes Group

Weak diversification

The 3 months correlation between Power and Wickes is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Wickes Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wickes Group PLC and Power Metal 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 Power Metal Resources are associated (or correlated) with Wickes Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wickes Group PLC has no effect on the direction of Power Metal i.e., Power Metal and Wickes Group go up and down completely randomly.

Pair Corralation between Power Metal and Wickes Group

Assuming the 90 days trading horizon Power Metal is expected to generate 1.57 times less return on investment than Wickes Group. In addition to that, Power Metal is 1.92 times more volatile than Wickes Group PLC. It trades about 0.07 of its total potential returns per unit of risk. Wickes Group PLC is currently generating about 0.22 per unit of volatility. If you would invest  18,394  in Wickes Group PLC on April 22, 2025 and sell it today you would earn a total of  4,456  from holding Wickes Group PLC or generate 24.23% return on investment over 90 days.

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

Power Metal Resources  vs.  Wickes Group PLC

Power Metal Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metal Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Power Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Wickes Group PLC

Risk-Adjusted Performance

Solid

Over the last 90 days Wickes Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Wickes Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Metal and Wickes Group

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

The idea behind Power Metal Resources and Wickes Group PLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.