Correlation Between Western Union and Siriuspoint
Can any of the company-specific risk be diversified away by investing in both Western Union and Siriuspoint 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 Siriuspoint 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 Siriuspoint, you can compare the effects of market volatilities on Western Union and Siriuspoint 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 Siriuspoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Siriuspoint.
Diversification Opportunities for Western Union and Siriuspoint
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Siriuspoint is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Western Union i.e., Western Union and Siriuspoint go up and down completely randomly.
Pair Corralation between Western Union and Siriuspoint
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Siriuspoint. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 1.83 times less risky than Siriuspoint. The stock trades about -0.13 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,357 in Siriuspoint on August 24, 2024 and sell it today you would earn a total of 173.00 from holding Siriuspoint or generate 12.75% 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. Siriuspoint
Performance |
| Timeline |
| Western Union |
| Siriuspoint |
Western Union and Siriuspoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Siriuspoint
The main advantage of trading using opposite Western Union and Siriuspoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Siriuspoint 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 Siriuspoint will offset losses from the drop in Siriuspoint's long position.| Western Union vs. American Express | Western Union vs. PayPal Holdings | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings |
| Siriuspoint vs. Maiden Holdings | Siriuspoint vs. Reinsurance Group of | Siriuspoint vs. Oxbridge Re Holdings | Siriuspoint vs. Greenlight Capital Re |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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