Correlation Between Western Union and CME

Can any of the company-specific risk be diversified away by investing in both Western Union and CME 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 CME 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 CME Group, you can compare the effects of market volatilities on Western Union and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and CME.

Diversification Opportunities for Western Union and CME

0.09

Correlation Coefficient

Western Union  CME

Significant diversification

The 3 months correlation between Western and CME is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Western Union i.e., Western Union and CME go up and down completely randomly.

Pair Corralation between Western Union and CME

Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the CME. In addition to that, Western Union is 1.49 times more volatile than CME Group. It trades about -0.14 of its total potential returns per unit of risk. CME Group is currently generating about 0.03 per unit of volatility. If you would invest  28,169  in CME Group on May 6, 2025 and sell it today you would earn a total of  541.00  from holding CME Group or generate 1.92% return on investment over 90 days.

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

Western Union Co  vs.  CME Group

Western Union

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CME Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CME Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CME is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Union and CME

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

The idea behind Western Union Co and CME Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.