Correlation Between CONSOLIDATED and Western Union

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

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

Diversification Opportunities for CONSOLIDATED and Western Union

-0.05

Correlation Coefficient

CONSOLIDATED  Western Union

Good diversification

The 3 months correlation between CONSOLIDATED and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CONSOLIDATED EDISON N and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and CONSOLIDATED 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 CONSOLIDATED EDISON N 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 CONSOLIDATED i.e., CONSOLIDATED and Western Union go up and down completely randomly.

Pair Corralation between CONSOLIDATED and Western Union

Assuming the 90 days trading horizon CONSOLIDATED EDISON N is expected to under-perform the Western Union. But the bond apears to be less risky and, when comparing its historical volatility, CONSOLIDATED EDISON N is 1.3 times less risky than Western Union. The bond trades about -0.23 of its potential returns per unit of risk. The Western Union Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,176  in Western Union Co on September 15, 2024 and sell it today you would lose (86.00) from holding Western Union Co or give up 7.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.69%
Values	Daily Returns

CONSOLIDATED EDISON N  vs.  Western Union Co

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for CONSOLIDATED EDISON N investors.

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 CONSOLIDATED and Western Union

The main advantage of trading using opposite CONSOLIDATED and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSOLIDATED 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 CONSOLIDATED EDISON N 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 Transaction History module to view history of all your transactions and understand their impact on performance.