Correlation Between GEAR4MUSIC and Webster Financial
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and Webster Financial, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and Webster Financial.
Diversification Opportunities for GEAR4MUSIC and Webster Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GEAR4MUSIC and Webster is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and Webster Financial go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and Webster Financial
Assuming the 90 days horizon GEAR4MUSIC is expected to generate 1.45 times less return on investment than Webster Financial. In addition to that, GEAR4MUSIC is 1.02 times more volatile than Webster Financial. It trades about 0.08 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.12 per unit of volatility. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. Webster Financial
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| Webster Financial |
GEAR4MUSIC and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and Webster Financial
The main advantage of trading using opposite GEAR4MUSIC and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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.| GEAR4MUSIC vs. ETFS Coffee ETC | GEAR4MUSIC vs. JAPAN TOBACCO UNSPADR12 | GEAR4MUSIC vs. ScanSource | GEAR4MUSIC vs. Hanison Construction Holdings |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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