Correlation Between Western Union and Omni Financial

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

Diversification Opportunities for Western Union and Omni Financial

0.0

Correlation Coefficient

Western Union  Omni Financial

Pay attention - limited upside

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

Pair Corralation between Western Union and Omni Financial

If you would invest  1,291  in Western Union Co on January 29, 2024 and sell it today you would earn a total of  56.00  from holding Western Union Co or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	51.16%
Values	Daily Returns

Western Union Co  vs.  Omni Financial Services

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 May 2024.

Omni Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Omni Financial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Union and Omni Financial

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

The idea behind Western Union Co and Omni Financial Services 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.