Correlation Between Fast Retailing and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Webster Financial, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Webster Financial.
Diversification Opportunities for Fast Retailing and Webster Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and Webster is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Webster Financial go up and down completely randomly.
Pair Corralation between Fast Retailing and Webster Financial
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the Webster Financial. In addition to that, Fast Retailing is 1.07 times more volatile than Webster Financial. It trades about -0.12 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.21 per unit of volatility. If you would invest 5,300 in Webster Financial on November 4, 2024 and sell it today you would earn a total of 450.00 from holding Webster Financial or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fast Retailing Co vs. Webster Financial
Performance |
| Timeline |
| Fast Retailing |
| Webster Financial |
Fast Retailing and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Webster Financial
The main advantage of trading using opposite Fast Retailing and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. UNIQA INSURANCE GR | Fast Retailing vs. HANOVER INSURANCE | Fast Retailing vs. INSURANCE AUST GRP | Fast Retailing vs. Webster Financial |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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