Correlation Between EZCORP and Western Union

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

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

Diversification Opportunities for EZCORP and Western Union

-0.58

Correlation Coefficient

EZCORP  Western Union

Excellent diversification

The 3 months correlation between EZCORP and Western is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding EZCORP Inc and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and EZCORP 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 EZCORP Inc 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 EZCORP i.e., EZCORP and Western Union go up and down completely randomly.

Pair Corralation between EZCORP and Western Union

Given the investment horizon of 90 days EZCORP Inc is expected to generate 1.12 times more return on investment than Western Union. However, EZCORP is 1.12 times more volatile than Western Union Co. It trades about 0.06 of its potential returns per unit of risk. Western Union Co is currently generating about 0.03 per unit of risk. If you would invest  822.00  in EZCORP Inc on October 5, 2024 and sell it today you would earn a total of  390.00  from holding EZCORP Inc or generate 47.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EZCORP Inc  vs.  Western Union Co

EZCORP Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EZCORP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Western Union

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Union Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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 EZCORP and Western Union

The main advantage of trading using opposite EZCORP and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZCORP 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 EZCORP Inc and Western Union Co 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 Anywhere module to track or share privately all of your investments from the convenience of any device.