Correlation Between TransUnion and Experian PLC

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

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

Diversification Opportunities for TransUnion and Experian PLC

0.7

Correlation Coefficient

TransUnion  Experian PLC

Poor diversification

The 3 months correlation between TransUnion and Experian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TransUnion and Experian PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian PLC and TransUnion 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 TransUnion are associated (or correlated) with Experian PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian PLC has no effect on the direction of TransUnion i.e., TransUnion and Experian PLC go up and down completely randomly.

Pair Corralation between TransUnion and Experian PLC

Considering the 90-day investment horizon TransUnion is expected to generate 1.11 times more return on investment than Experian PLC. However, TransUnion is 1.11 times more volatile than Experian PLC. It trades about 0.0 of its potential returns per unit of risk. Experian PLC is currently generating about -0.02 per unit of risk. If you would invest  9,805  in TransUnion on September 12, 2024 and sell it today you would lose (105.00) from holding TransUnion or give up 1.07% of portfolio value over 90 days.

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

TransUnion  vs.  Experian PLC

TransUnion

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days TransUnion has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Experian PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Experian PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TransUnion and Experian PLC

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

The idea behind TransUnion and Experian PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.