Correlation Between Brunswick and Western Union
Can any of the company-specific risk be diversified away by investing in both Brunswick and Western Union 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 Brunswick and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Western Union Co, you can compare the effects of market volatilities on Brunswick and Western Union 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 Brunswick with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Western Union.
Diversification Opportunities for Brunswick and Western Union
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brunswick and Western is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Brunswick 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 Brunswick are associated (or correlated) with Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Brunswick i.e., Brunswick and Western Union go up and down completely randomly.
Pair Corralation between Brunswick and Western Union
Allowing for the 90-day total investment horizon Brunswick is expected to generate 3.83 times less return on investment than Western Union. In addition to that, Brunswick is 2.43 times more volatile than Western Union Co. It trades about 0.01 of its total potential returns per unit of risk. Western Union Co is currently generating about 0.12 per unit of volatility. If you would invest 1,074 in Western Union Co on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Western Union Co or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Western Union Co
Performance |
| Timeline |
| Brunswick |
| Western Union |
Brunswick and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Western Union
The main advantage of trading using opposite Brunswick and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick position performs unexpectedly, Western Union 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 Union will offset losses from the drop in Western Union's long position.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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