Correlation Between HF FOODS and Webster Financial
Can any of the company-specific risk be diversified away by investing in both HF FOODS 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 HF FOODS and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HF FOODS GRP and Webster Financial, you can compare the effects of market volatilities on HF FOODS 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 HF FOODS with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF FOODS and Webster Financial.
Diversification Opportunities for HF FOODS and Webster Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3GX and Webster is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and HF FOODS 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 HF FOODS GRP 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 HF FOODS i.e., HF FOODS and Webster Financial go up and down completely randomly.
Pair Corralation between HF FOODS and Webster Financial
Assuming the 90 days horizon HF FOODS is expected to generate 4.0 times less return on investment than Webster Financial. In addition to that, HF FOODS is 1.69 times more volatile than Webster Financial. It trades about 0.01 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.07 per unit of volatility. If you would invest 3,383 in Webster Financial on September 2, 2024 and sell it today you would earn a total of 2,417 from holding Webster Financial or generate 71.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HF FOODS GRP vs. Webster Financial
Performance |
| Timeline |
| HF FOODS GRP |
| Webster Financial |
HF FOODS and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF FOODS and Webster Financial
The main advantage of trading using opposite HF FOODS and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF FOODS 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.| HF FOODS vs. Playtech plc | HF FOODS vs. Perdoceo Education | HF FOODS vs. DeVry Education Group | HF FOODS vs. Xinhua Winshare Publishing |
| Webster Financial vs. Playa Hotels Resorts | Webster Financial vs. FIREWEED METALS P | Webster Financial vs. Hyatt Hotels | Webster Financial vs. HYATT HOTELS A |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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