Correlation Between Western Union and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Western Union and Bread Financial 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 Bread Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Western Union and Bread Financial Holdings, you can compare the effects of market volatilities on Western Union and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Bread Financial.
Diversification Opportunities for Western Union and Bread Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Bread is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Western Union and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial 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 The Western Union are associated (or correlated) with Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Western Union i.e., Western Union and Bread Financial go up and down completely randomly.
Pair Corralation between Western Union and Bread Financial
Assuming the 90 days trading horizon Western Union is expected to generate 3.32 times less return on investment than Bread Financial. In addition to that, Western Union is 1.14 times more volatile than Bread Financial Holdings. It trades about 0.04 of its total potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.15 per unit of volatility. If you would invest 4,344 in Bread Financial Holdings on October 12, 2024 and sell it today you would earn a total of 4,683 from holding Bread Financial Holdings or generate 107.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.11% |
| Values | Daily Returns |
The Western Union vs. Bread Financial Holdings
Performance |
| Timeline |
| Western Union |
| Bread Financial Holdings |
Western Union and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Bread Financial
The main advantage of trading using opposite Western Union and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Western Union vs. Take Two Interactive Software | Western Union vs. Cognizant Technology Solutions | Western Union vs. Marvell Technology | Western Union vs. Micron Technology |
| Bread Financial vs. Capital One Financial | Bread Financial vs. Bank of America | Bread Financial vs. Synchrony Financial | Bread Financial vs. Truist Financial |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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