Correlation Between Experian PLC and TransUnion

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

By analyzing existing cross correlation between Experian PLC and TransUnion, you can compare the effects of market volatilities on Experian PLC and TransUnion 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 Experian PLC with a short position of TransUnion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Experian PLC and TransUnion.

Diversification Opportunities for Experian PLC and TransUnion

0.77

Correlation Coefficient

Experian PLC  TransUnion

Poor diversification

The 3 months correlation between Experian and TransUnion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Experian PLC and TransUnion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransUnion and Experian PLC 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 Experian PLC are associated (or correlated) with TransUnion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransUnion has no effect on the direction of Experian PLC i.e., Experian PLC and TransUnion go up and down completely randomly.

Pair Corralation between Experian PLC and TransUnion

Assuming the 90 days horizon Experian PLC is expected to under-perform the TransUnion. But the otc stock apears to be less risky and, when comparing its historical volatility, Experian PLC is 1.66 times less risky than TransUnion. The otc stock trades about -0.36 of its potential returns per unit of risk. The TransUnion is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  10,238  in TransUnion on September 24, 2024 and sell it today you would lose (832.00) from holding TransUnion or give up 8.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Experian PLC  vs.  TransUnion

Experian PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TransUnion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransUnion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Experian PLC and TransUnion

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

The idea behind Experian PLC and TransUnion 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.