Correlation Between UNIVMUSIC GRPADR/050 and Webster Financial
Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR/050 and Webster 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 UNIVMUSIC GRPADR/050 and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and Webster Financial, you can compare the effects of market volatilities on UNIVMUSIC GRPADR/050 and Webster 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 UNIVMUSIC GRPADR/050 with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR/050 and Webster Financial.
Diversification Opportunities for UNIVMUSIC GRPADR/050 and Webster Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNIVMUSIC and Webster is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050 are associated (or correlated) with Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of UNIVMUSIC GRPADR/050 i.e., UNIVMUSIC GRPADR/050 and Webster Financial go up and down completely randomly.
Pair Corralation between UNIVMUSIC GRPADR/050 and Webster Financial
Assuming the 90 days trading horizon UNIVMUSIC GRPADR050 is expected to under-perform the Webster Financial. But the stock apears to be less risky and, when comparing its historical volatility, UNIVMUSIC GRPADR050 is 1.23 times less risky than Webster Financial. The stock trades about -0.07 of its potential returns per unit of risk. The Webster Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,990 in Webster Financial on August 31, 2024 and sell it today you would earn a total of 1,860 from holding Webster Financial or generate 46.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVMUSIC GRPADR050 vs. Webster Financial
Performance |
| Timeline |
| UNIVMUSIC GRPADR/050 |
| Webster Financial |
UNIVMUSIC GRPADR/050 and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVMUSIC GRPADR/050 and Webster Financial
The main advantage of trading using opposite UNIVMUSIC GRPADR/050 and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR/050 position performs unexpectedly, Webster 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 Webster Financial will offset losses from the drop in Webster Financial's long position.| UNIVMUSIC GRPADR/050 vs. Austevoll Seafood ASA | UNIVMUSIC GRPADR/050 vs. Tyson Foods | UNIVMUSIC GRPADR/050 vs. Perseus Mining Limited | UNIVMUSIC GRPADR/050 vs. GALENA MINING LTD |
| Webster Financial vs. Seven West Media | Webster Financial vs. Rayonier Advanced Materials | Webster Financial vs. Hollywood Bowl Group | Webster Financial vs. Eagle Materials |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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