Correlation Between KINGBOARD CHEMICAL and Webster Financial
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Webster Financial, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Webster Financial.
Diversification Opportunities for KINGBOARD CHEMICAL and Webster Financial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KINGBOARD and Webster is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Webster Financial go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Webster Financial
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.18 times more return on investment than Webster Financial. However, KINGBOARD CHEMICAL is 1.18 times more volatile than Webster Financial. It trades about 0.39 of its potential returns per unit of risk. Webster Financial is currently generating about 0.29 per unit of risk. If you would invest 224.00 in KINGBOARD CHEMICAL on October 25, 2024 and sell it today you would earn a total of 34.00 from holding KINGBOARD CHEMICAL or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Webster Financial
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Webster Financial |
KINGBOARD CHEMICAL and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Webster Financial
The main advantage of trading using opposite KINGBOARD CHEMICAL and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc |
| Webster Financial vs. Tower Semiconductor | Webster Financial vs. Fast Retailing Co | Webster Financial vs. PICKN PAY STORES | Webster Financial vs. H2O Retailing |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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