Correlation Between Digi International and Western Union
Can any of the company-specific risk be diversified away by investing in both Digi International 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 Digi International and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Western Union Co, you can compare the effects of market volatilities on Digi International 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 Digi International with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Western Union.
Diversification Opportunities for Digi International and Western Union
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digi and Western is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Digi International 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 Digi International 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 Digi International i.e., Digi International and Western Union go up and down completely randomly.
Pair Corralation between Digi International and Western Union
Given the investment horizon of 90 days Digi International is expected to generate 2.63 times more return on investment than Western Union. However, Digi International is 2.63 times more volatile than Western Union Co. It trades about 0.26 of its potential returns per unit of risk. Western Union Co is currently generating about 0.11 per unit of risk. If you would invest 2,897 in Digi International on September 1, 2024 and sell it today you would earn a total of 425.00 from holding Digi International or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Western Union Co
Performance |
| Timeline |
| Digi International |
| Western Union |
Digi International and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Western Union
The main advantage of trading using opposite Digi International and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International 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.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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