Correlation Between United Natural and Webster Financial
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Webster Financial, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Webster Financial.
Diversification Opportunities for United Natural and Webster Financial
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Webster is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Webster Financial go up and down completely randomly.
Pair Corralation between United Natural and Webster Financial
Assuming the 90 days horizon United Natural Foods is expected to generate 1.53 times more return on investment than Webster Financial. However, United Natural is 1.53 times more volatile than Webster Financial. It trades about 0.2 of its potential returns per unit of risk. Webster Financial is currently generating about 0.17 per unit of risk. If you would invest 1,262 in United Natural Foods on August 28, 2024 and sell it today you would earn a total of 948.00 from holding United Natural Foods or generate 75.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Webster Financial
Performance |
| Timeline |
| United Natural Foods |
| Webster Financial |
United Natural and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Webster Financial
The main advantage of trading using opposite United Natural and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. DAIRY FARM INTL | United Natural vs. LION ONE METALS | United Natural vs. Sumitomo Mitsui Construction | United Natural vs. WIMFARM SA EO |
| Webster Financial vs. Superior Plus Corp | Webster Financial vs. NMI Holdings | Webster Financial vs. Origin Agritech | 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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