Correlation Between Webster Financial and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Webster Financial and KeyCorp 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 Webster Financial and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and KeyCorp, you can compare the effects of market volatilities on Webster Financial and KeyCorp 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 Webster Financial with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and KeyCorp.
Diversification Opportunities for Webster Financial and KeyCorp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Webster and KeyCorp is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Webster Financial 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 Webster Financial are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Webster Financial i.e., Webster Financial and KeyCorp go up and down completely randomly.
Pair Corralation between Webster Financial and KeyCorp
Assuming the 90 days trading horizon Webster Financial is expected to generate 1.03 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Webster Financial is 1.19 times less risky than KeyCorp. It trades about 0.03 of its potential returns per unit of risk. KeyCorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,068 in KeyCorp on August 26, 2024 and sell it today you would earn a total of 246.00 from holding KeyCorp or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. KeyCorp
Performance |
| Timeline |
| Webster Financial |
| KeyCorp |
Webster Financial and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and KeyCorp
The main advantage of trading using opposite Webster Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Webster Financial vs. KeyCorp | Webster Financial vs. Associated Banc Corp | Webster Financial vs. New York Community | Webster Financial vs. Synovus Financial Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |