Correlation Between TransUnion and Equifax

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

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

Diversification Opportunities for TransUnion and Equifax

0.68

Correlation Coefficient

TransUnion  Equifax

Poor diversification

The 3 months correlation between TransUnion and Equifax is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TransUnion and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and TransUnion 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 TransUnion are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of TransUnion i.e., TransUnion and Equifax go up and down completely randomly.

Pair Corralation between TransUnion and Equifax

Considering the 90-day investment horizon TransUnion is expected to under-perform the Equifax. In addition to that, TransUnion is 1.23 times more volatile than Equifax. It trades about -0.07 of its total potential returns per unit of risk. Equifax is currently generating about -0.04 per unit of volatility. If you would invest  25,481  in Equifax on December 30, 2024 and sell it today you would lose (1,448) from holding Equifax or give up 5.68% of portfolio value over 90 days.

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

TransUnion  vs.  Equifax

TransUnion

Risk-Adjusted Performance

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.

Equifax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Equifax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TransUnion and Equifax

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

The idea behind TransUnion and Equifax 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.

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 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.