Correlation Between Crdito Real and Western Union

Can any of the company-specific risk be diversified away by investing in both Crdito Real and Western Union 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 Crdito Real and Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crdito Real SAB and The Western Union, you can compare the effects of market volatilities on Crdito Real and Western Union 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 Crdito Real with a short position of Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crdito Real and Western Union.

Diversification Opportunities for Crdito Real and Western Union

0.0

Correlation Coefficient

Crdito Real  Western Union

Pay attention - limited upside

The 3 months correlation between Crdito and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Crdito Real SAB and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Crdito Real 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 Crdito Real SAB are associated (or correlated) with Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Crdito Real i.e., Crdito Real and Western Union go up and down completely randomly.

Pair Corralation between Crdito Real and Western Union

If you would invest  23,120  in The Western Union on October 12, 2024 and sell it today you would lose (1,420) from holding The Western Union or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Crdito Real SAB  vs.  The Western Union

Crdito Real SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdito Real SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Crdito Real is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Western Union

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Western Union has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Crdito Real and Western Union

The main advantage of trading using opposite Crdito Real and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crdito Real position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.

The idea behind Crdito Real SAB and The Western Union pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.