Correlation Between Charter Communications and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Webster Financial, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Webster Financial.
Diversification Opportunities for Charter Communications and Webster Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and Webster is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Webster Financial go up and down completely randomly.
Pair Corralation between Charter Communications and Webster Financial
Assuming the 90 days trading horizon Charter Communications is expected to generate 6.16 times less return on investment than Webster Financial. In addition to that, Charter Communications is 1.09 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 3,781 in Webster Financial on September 14, 2024 and sell it today you would earn a total of 1,819 from holding Webster Financial or generate 48.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Webster Financial
Performance |
| Timeline |
| Charter Communications |
| Webster Financial |
Charter Communications and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Webster Financial
The main advantage of trading using opposite Charter Communications and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
| Webster Financial vs. Fifth Third Bancorp | Webster Financial vs. Regions Financial | Webster Financial vs. Superior Plus Corp | Webster Financial vs. SIVERS SEMICONDUCTORS AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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