Correlation Between Freedom Bank and Western Union

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

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

Diversification Opportunities for Freedom Bank and Western Union

-0.05

Correlation Coefficient

Freedom Bank  Western Union

Good diversification

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

Pair Corralation between Freedom Bank and Western Union

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Western Union. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 1.28 times less risky than Western Union. The otc stock trades about -0.05 of its potential returns per unit of risk. The Western Union Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,240  in Western Union Co on August 20, 2024 and sell it today you would lose (156.00) from holding Western Union Co or give up 12.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.06%
Values	Daily Returns

Freedom Bank of  vs.  Western Union Co

Freedom Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Bank of are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Freedom Bank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 comparatively stable basic indicators, Western Union is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Freedom Bank and Western Union

The main advantage of trading using opposite Freedom Bank and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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 Freedom Bank of 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..