Correlation Between Western Union and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Western Union and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings, you can compare the effects of market volatilities on Western Union and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Lexinfintech Holdings.
Diversification Opportunities for Western Union and Lexinfintech Holdings
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Lexinfintech is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Western Union i.e., Western Union and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Western Union and Lexinfintech Holdings
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Lexinfintech Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 4.25 times less risky than Lexinfintech Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The Lexinfintech Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 583.00 in Lexinfintech Holdings on October 20, 2024 and sell it today you would earn a total of 96.00 from holding Lexinfintech Holdings or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Lexinfintech Holdings
Performance |
| Timeline |
| Western Union |
| Lexinfintech Holdings |
Western Union and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Lexinfintech Holdings
The main advantage of trading using opposite Western Union and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
| Lexinfintech Holdings vs. 360 Finance | Lexinfintech Holdings vs. Atlanticus Holdings | Lexinfintech Holdings vs. Qudian Inc | Lexinfintech Holdings vs. Enova International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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