Correlation Between Japan Asia and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Japan Asia 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 Japan Asia and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and Webster Financial, you can compare the effects of market volatilities on Japan Asia 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 Japan Asia with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Webster Financial.
Diversification Opportunities for Japan Asia and Webster Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Webster is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and Webster Financial go up and down completely randomly.
Pair Corralation between Japan Asia and Webster Financial
Assuming the 90 days horizon Japan Asia Investment is expected to under-perform the Webster Financial. But the stock apears to be less risky and, when comparing its historical volatility, Japan Asia Investment is 1.2 times less risky than Webster Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Webster Financial is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 5,800 in Webster Financial on October 30, 2024 and sell it today you would lose (300.00) from holding Webster Financial or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Webster Financial
Performance |
| Timeline |
| Japan Asia Investment |
| Webster Financial |
Japan Asia and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Webster Financial
The main advantage of trading using opposite Japan Asia and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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.| Japan Asia vs. Tsingtao Brewery | Japan Asia vs. MOLSON RS BEVERAGE | Japan Asia vs. Fevertree Drinks PLC | Japan Asia vs. China Datang |
| Webster Financial vs. SPARTAN STORES | Webster Financial vs. CENTURIA OFFICE REIT | Webster Financial vs. The Home Depot | Webster Financial vs. Geely Automobile Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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