Correlation Between Power Financial and Western Investment

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

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

Diversification Opportunities for Power Financial and Western Investment

0.21

Correlation Coefficient

Power Financial  Western Investment

Modest diversification

The 3 months correlation between Power and Western is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Power Financial 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 Financial Corp are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Power Financial i.e., Power Financial and Western Investment go up and down completely randomly.

Pair Corralation between Power Financial and Western Investment

Assuming the 90 days trading horizon Power Financial Corp is expected to under-perform the Western Investment. But the preferred stock apears to be less risky and, when comparing its historical volatility, Power Financial Corp is 6.68 times less risky than Western Investment. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Western Investment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Western Investment on September 13, 2025 and sell it today you would lose (1.00) from holding Western Investment or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Power Financial Corp  vs.  Western Investment

Power Financial Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Power Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Western Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Western Investment may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Power Financial and Western Investment

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

The idea behind Power Financial Corp and Western Investment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.