Correlation Between Western Union and Evercore Partners
Can any of the company-specific risk be diversified away by investing in both Western Union and Evercore Partners 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 Evercore Partners 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 Evercore Partners, you can compare the effects of market volatilities on Western Union and Evercore Partners 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 Evercore Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Evercore Partners.
Diversification Opportunities for Western Union and Evercore Partners
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Evercore is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Evercore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evercore Partners 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 Evercore Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evercore Partners has no effect on the direction of Western Union i.e., Western Union and Evercore Partners go up and down completely randomly.
Pair Corralation between Western Union and Evercore Partners
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Evercore Partners. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 2.51 times less risky than Evercore Partners. The stock trades about -0.13 of its potential returns per unit of risk. The Evercore Partners is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 25,774 in Evercore Partners on August 24, 2024 and sell it today you would earn a total of 5,179 from holding Evercore Partners or generate 20.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Union Co vs. Evercore Partners
Performance |
| Timeline |
| Western Union |
| Evercore Partners |
Western Union and Evercore Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Evercore Partners
The main advantage of trading using opposite Western Union and Evercore Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Evercore Partners 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 Evercore Partners will offset losses from the drop in Evercore Partners' long position.| Western Union vs. American Express | Western Union vs. PayPal Holdings | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings |
| Evercore Partners vs. PJT Partners | Evercore Partners vs. Moelis Co | Evercore Partners vs. Perella Weinberg Partners | Evercore Partners vs. Jefferies Financial Group |
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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