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
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Webster is 0.51. 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 is expected to generate 5.73 times less return on investment than Webster Financial. In addition to that, United Natural is 1.65 times more volatile than Webster Financial. It trades about 0.0 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.02 per unit of volatility. If you would invest 4,802 in Webster Financial on October 30, 2024 and sell it today you would earn a total of 698.00 from holding Webster Financial or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| 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. FIRST SAVINGS FINL | United Natural vs. SCANSOURCE | United Natural vs. ScanSource | United Natural vs. Japan Asia Investment |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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