Correlation Between Western Union and AlphaTime Acquisition

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

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

Diversification Opportunities for Western Union and AlphaTime Acquisition

-0.29

Correlation Coefficient

Western Union  AlphaTime Acquisition

Very good diversification

The 3 months correlation between Western and AlphaTime is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition 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 Western Union Co are associated (or correlated) with AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Western Union i.e., Western Union and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Western Union and AlphaTime Acquisition

Allowing for the 90-day total investment horizon Western Union Co is expected to generate 0.36 times more return on investment than AlphaTime Acquisition. However, Western Union Co is 2.75 times less risky than AlphaTime Acquisition. It trades about 0.11 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about -0.06 per unit of risk. If you would invest  1,027  in Western Union Co on December 4, 2024 and sell it today you would earn a total of  47.00  from holding Western Union Co or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

Western Union Co  vs.  AlphaTime Acquisition Corp

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 2 (%) 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.

AlphaTime Acquisition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, AlphaTime Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Union and AlphaTime Acquisition

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

The idea behind Western Union Co and AlphaTime Acquisition Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.