Correlation Between Western Union and Green Dot
Can any of the company-specific risk be diversified away by investing in both Western Union and Green Dot 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 Green Dot 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 Green Dot, you can compare the effects of market volatilities on Western Union and Green Dot 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 Green Dot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Green Dot.
Diversification Opportunities for Western Union and Green Dot
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Green is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Green Dot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Dot 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 Green Dot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Dot has no effect on the direction of Western Union i.e., Western Union and Green Dot go up and down completely randomly.
Pair Corralation between Western Union and Green Dot
Allowing for the 90-day total investment horizon Western Union Co is expected to generate 0.46 times more return on investment than Green Dot. However, Western Union Co is 2.18 times less risky than Green Dot. It trades about 0.03 of its potential returns per unit of risk. Green Dot is currently generating about -0.02 per unit of risk. If you would invest 986.00 in Western Union Co on August 24, 2024 and sell it today you would earn a total of 120.00 from holding Western Union Co or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Green Dot
Performance |
| Timeline |
| Western Union |
| Green Dot |
Western Union and Green Dot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Green Dot
The main advantage of trading using opposite Western Union and Green Dot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Green Dot 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 Green Dot will offset losses from the drop in Green Dot's long position.| Western Union vs. American Express | Western Union vs. PayPal Holdings | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings |
| Green Dot vs. Guidewire Software | Green Dot vs. Envestnet | Green Dot vs. Evertec | Green Dot vs. Axos Financial |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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