Correlation Between Orix Corp and Western Union

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

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

Diversification Opportunities for Orix Corp and Western Union

0.09

Correlation Coefficient

Orix Corp  Western Union

Significant diversification

The 3 months correlation between Orix and Western is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Orix Corp 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and Western Union go up and down completely randomly.

Pair Corralation between Orix Corp and Western Union

Allowing for the 90-day total investment horizon Orix Corp is expected to generate 2.04 times less return on investment than Western Union. But when comparing it to its historical volatility, Orix Corp Ads is 1.33 times less risky than Western Union. It trades about 0.01 of its potential returns per unit of risk. Western Union Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,045  in Western Union Co on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Western Union Co or generate 1.24% return on investment over 90 days.

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

Orix Corp Ads  vs.  Western Union Co

Orix Corp Ads

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Union

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Union Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Union is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Orix Corp and Western Union

The main advantage of trading using opposite Orix Corp and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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 Orix Corp Ads 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.