Correlation Between Seven West and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Webster Financial, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Webster Financial.
Diversification Opportunities for Seven West and Webster Financial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Seven and Webster is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Seven West 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 Seven West Media 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 Seven West i.e., Seven West and Webster Financial go up and down completely randomly.
Pair Corralation between Seven West and Webster Financial
Assuming the 90 days horizon Seven West is expected to generate 6.85 times less return on investment than Webster Financial. But when comparing it to its historical volatility, Seven West Media is 1.28 times less risky than Webster Financial. It trades about 0.05 of its potential returns per unit of risk. Webster Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,740 in Webster Financial on August 31, 2024 and sell it today you would earn a total of 1,110 from holding Webster Financial or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Webster Financial
Performance |
| Timeline |
| Seven West Media |
| Webster Financial |
Seven West and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Webster Financial
The main advantage of trading using opposite Seven West and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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.| Seven West vs. MTI WIRELESS EDGE | Seven West vs. Infrastrutture Wireless Italiane | Seven West vs. MAVEN WIRELESS SWEDEN | Seven West vs. Iridium Communications |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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