Correlation Between Western Union and Crexendo

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

Diversification Opportunities for Western Union and Crexendo

-0.39

Correlation Coefficient

Western Union  Crexendo

Very good diversification

The 3 months correlation between Western and Crexendo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Crexendo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crexendo 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 Crexendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crexendo has no effect on the direction of Western Union i.e., Western Union and Crexendo go up and down completely randomly.

Pair Corralation between Western Union and Crexendo

Allowing for the 90-day total investment horizon Western Union Co is expected to generate 0.25 times more return on investment than Crexendo. However, Western Union Co is 3.93 times less risky than Crexendo. It trades about 0.1 of its potential returns per unit of risk. Crexendo is currently generating about -0.12 per unit of risk. If you would invest  1,239  in Western Union Co on February 13, 2024 and sell it today you would earn a total of  98.00  from holding Western Union Co or generate 7.91% return on investment over 90 days.

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

Western Union Co  vs.  Crexendo

Western Union

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Union Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Western Union may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Crexendo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crexendo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Western Union and Crexendo

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

The idea behind Western Union Co and Crexendo 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.