Correlation Between Western Union and Unifin Financiera

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

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

Diversification Opportunities for Western Union and Unifin Financiera

0.0

Correlation Coefficient

Western Union  Unifin Financiera

Pay attention - limited upside

The 3 months correlation between Western and Unifin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Western Union and Unifin Financiera S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifin Financiera and Western Union 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 The Western Union are associated (or correlated) with Unifin Financiera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifin Financiera has no effect on the direction of Western Union i.e., Western Union and Unifin Financiera go up and down completely randomly.

Pair Corralation between Western Union and Unifin Financiera

Assuming the 90 days horizon Western Union is expected to generate 3643.8 times less return on investment than Unifin Financiera. But when comparing it to its historical volatility, The Western Union is 25.07 times less risky than Unifin Financiera. It trades about 0.0 of its potential returns per unit of risk. Unifin Financiera S is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Unifin Financiera S on October 12, 2024 and sell it today you would earn a total of  1,080  from holding Unifin Financiera S or generate 900.0% return on investment over 90 days.

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

The Western Union  vs.  Unifin Financiera S

Western Union

Risk-Adjusted Performance

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Very Weak

Over the last 90 days The Western Union has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Unifin Financiera

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Western Union and Unifin Financiera

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

The idea behind The Western Union and Unifin Financiera S 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.