Correlation Between Western Union and Mars Acquisition
Can any of the company-specific risk be diversified away by investing in both Western Union and Mars Acquisition 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 Mars Acquisition 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 Mars Acquisition Corp, you can compare the effects of market volatilities on Western Union and Mars Acquisition 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 Mars Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Mars Acquisition.
Diversification Opportunities for Western Union and Mars Acquisition
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Mars is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Western Union i.e., Western Union and Mars Acquisition go up and down completely randomly.
Pair Corralation between Western Union and Mars Acquisition
Allowing for the 90-day total investment horizon Western Union is expected to generate 16.46 times less return on investment than Mars Acquisition. But when comparing it to its historical volatility, Western Union Co is 6.17 times less risky than Mars Acquisition. It trades about 0.11 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Mars Acquisition Corp on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Mars Acquisition Corp or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 47.62% |
| Values | Daily Returns |
Western Union Co vs. Mars Acquisition Corp
Performance |
| Timeline |
| Western Union |
| Mars Acquisition Corp |
Western Union and Mars Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Mars Acquisition
The main advantage of trading using opposite Western Union and Mars Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Mars Acquisition 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 Mars Acquisition will offset losses from the drop in Mars Acquisition's long position.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
| Mars Acquisition vs. Visa Class A | Mars Acquisition vs. Diamond Hill Investment | Mars Acquisition vs. Distoken Acquisition | Mars Acquisition vs. AllianceBernstein Holding LP |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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