Correlation Between IShares Trust and Western Union
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and The Western Union, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Western Union.
Diversification Opportunities for IShares Trust and Western Union
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Western is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Western Union go up and down completely randomly.
Pair Corralation between IShares Trust and Western Union
Assuming the 90 days trading horizon iShares Trust is expected to generate 0.45 times more return on investment than Western Union. However, iShares Trust is 2.22 times less risky than Western Union. It trades about 0.16 of its potential returns per unit of risk. The Western Union is currently generating about 0.07 per unit of risk. If you would invest 4,123 in iShares Trust on September 2, 2024 and sell it today you would earn a total of 2,189 from holding iShares Trust or generate 53.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.21% |
| Values | Daily Returns |
iShares Trust vs. The Western Union
Performance |
| Timeline |
| iShares Trust |
| Western Union |
IShares Trust and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Western Union
The main advantage of trading using opposite IShares Trust and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. Energisa SA | IShares Trust vs. BTG Pactual Logstica | IShares Trust vs. Plano Plano Desenvolvimento | IShares Trust vs. Companhia Habitasul de |
| Western Union vs. Lloyds Banking Group | Western Union vs. MAHLE Metal Leve | Western Union vs. SVB Financial Group | Western Union vs. Align Technology |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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