Correlation Between Equifax and TransUnion

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

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

Diversification Opportunities for Equifax and TransUnion

0.05

Correlation Coefficient

Equifax  TransUnion

Significant diversification

The 3 months correlation between Equifax and TransUnion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and TransUnion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransUnion and Equifax 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 Equifax are associated (or correlated) with TransUnion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransUnion has no effect on the direction of Equifax i.e., Equifax and TransUnion go up and down completely randomly.

Pair Corralation between Equifax and TransUnion

Considering the 90-day investment horizon Equifax is expected to under-perform the TransUnion. But the stock apears to be less risky and, when comparing its historical volatility, Equifax is 1.09 times less risky than TransUnion. The stock trades about -0.15 of its potential returns per unit of risk. The TransUnion is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,513  in TransUnion on September 4, 2024 and sell it today you would earn a total of  392.00  from holding TransUnion or generate 4.12% return on investment over 90 days.

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

Equifax  vs.  TransUnion

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

TransUnion

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TransUnion are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TransUnion is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Equifax and TransUnion

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

The idea behind Equifax and TransUnion 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.