Correlation Between Freedom Bank and Western Union
Can any of the company-specific risk be diversified away by investing in both Freedom Bank 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 Freedom Bank and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Western Union Co, you can compare the effects of market volatilities on Freedom Bank 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 Freedom Bank with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Western Union.
Diversification Opportunities for Freedom Bank and Western Union
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Western Union go up and down completely randomly.
Pair Corralation between Freedom Bank and Western Union
Given the investment horizon of 90 days Freedom Bank is expected to generate 2.42 times less return on investment than Western Union. But when comparing it to its historical volatility, Freedom Bank of is 1.47 times less risky than Western Union. It trades about 0.05 of its potential returns per unit of risk. Western Union Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Western Union Co on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Western Union Co or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Freedom Bank of vs. Western Union Co
Performance |
| Timeline |
| Freedom Bank |
| Western Union |
Freedom Bank and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Western Union
The main advantage of trading using opposite Freedom Bank and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. SCOR PK | Freedom Bank vs. Aquagold International | Freedom Bank vs. Thrivent High Yield |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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