Correlation Between Western Union and Embrace Change
Can any of the company-specific risk be diversified away by investing in both Western Union and Embrace Change 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 Western Union and Embrace Change into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and Embrace Change Acquisition, you can compare the effects of market volatilities on Western Union and Embrace Change 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 Western Union with a short position of Embrace Change. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Embrace Change.
Diversification Opportunities for Western Union and Embrace Change
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Embrace is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Embrace Change Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embrace Change Acqui and Western Union 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 Western Union Co are associated (or correlated) with Embrace Change. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embrace Change Acqui has no effect on the direction of Western Union i.e., Western Union and Embrace Change go up and down completely randomly.
Pair Corralation between Western Union and Embrace Change
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Embrace Change. In addition to that, Western Union is 5.37 times more volatile than Embrace Change Acquisition. It trades about -0.03 of its total potential returns per unit of risk. Embrace Change Acquisition is currently generating about 0.12 per unit of volatility. If you would invest 1,158 in Embrace Change Acquisition on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Embrace Change Acquisition or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Embrace Change Acquisition
Performance |
| Timeline |
| Western Union |
| Embrace Change Acqui |
Western Union and Embrace Change Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Embrace Change
The main advantage of trading using opposite Western Union and Embrace Change positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Embrace Change 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 Embrace Change will offset losses from the drop in Embrace Change's long position.| Western Union vs. American Express | Western Union vs. Morningstar Unconstrained Allocation | Western Union vs. Sitka Gold Corp | Western Union vs. MSCI ACWI exAUCONSUMER |
| Embrace Change vs. MFS High Income | Embrace Change vs. MFS Investment Grade | Embrace Change vs. Eaton Vance National | Embrace Change vs. Invesco High Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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