Correlation Between Western Union and Iris Energy
Can any of the company-specific risk be diversified away by investing in both Western Union and Iris Energy 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 Iris Energy 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 Iris Energy, you can compare the effects of market volatilities on Western Union and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Iris Energy.
Diversification Opportunities for Western Union and Iris Energy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Iris is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Western Union i.e., Western Union and Iris Energy go up and down completely randomly.
Pair Corralation between Western Union and Iris Energy
Allowing for the 90-day total investment horizon Western Union is expected to generate 13.32 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Western Union Co is 6.47 times less risky than Iris Energy. It trades about 0.1 of its potential returns per unit of risk. Iris Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,025 in Iris Energy on September 18, 2024 and sell it today you would earn a total of 348.00 from holding Iris Energy or generate 33.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Iris Energy
Performance |
| Timeline |
| Western Union |
| Iris Energy |
Western Union and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Iris Energy
The main advantage of trading using opposite Western Union and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Iris Energy 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 Iris Energy will offset losses from the drop in Iris Energy's long position.| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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