Correlation Between Western Union and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Western Union and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Western Union and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Emerson Radio.
Diversification Opportunities for Western Union and Emerson Radio
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Emerson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Western Union i.e., Western Union and Emerson Radio go up and down completely randomly.
Pair Corralation between Western Union and Emerson Radio
Allowing for the 90-day total investment horizon Western Union Co is expected to generate 0.52 times more return on investment than Emerson Radio. However, Western Union Co is 1.93 times less risky than Emerson Radio. It trades about 0.0 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest 1,210 in Western Union Co on September 2, 2024 and sell it today you would lose (109.00) from holding Western Union Co or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Emerson Radio
Performance |
| Timeline |
| Western Union |
| Emerson Radio |
Western Union and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Emerson Radio
The main advantage of trading using opposite Western Union and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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