Correlation Between IperionX Limited and Westwater Resources

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

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

Diversification Opportunities for IperionX Limited and Westwater Resources

0.86

Correlation Coefficient

IperionX Limited  Westwater Resources

Very poor diversification

The 3 months correlation between IperionX and Westwater is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IperionX Limited American and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources and IperionX Limited 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 IperionX Limited American 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 IperionX Limited i.e., IperionX Limited and Westwater Resources go up and down completely randomly.

Pair Corralation between IperionX Limited and Westwater Resources

Considering the 90-day investment horizon IperionX Limited American is expected to generate 0.82 times more return on investment than Westwater Resources. However, IperionX Limited American is 1.23 times less risky than Westwater Resources. It trades about 0.2 of its potential returns per unit of risk. Westwater Resources is currently generating about 0.14 per unit of risk. If you would invest  2,146  in IperionX Limited American on May 5, 2025 and sell it today you would earn a total of  1,632  from holding IperionX Limited American or generate 76.05% return on investment over 90 days.

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

IperionX Limited American  vs.  Westwater Resources

IperionX Limited American

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IperionX Limited American are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IperionX Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Westwater Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwater Resources are ranked lower than 10 (%) 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 IperionX Limited and Westwater Resources

The main advantage of trading using opposite IperionX Limited and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IperionX Limited 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 IperionX Limited American 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.