Correlation Between Webster Financial and New York
Can any of the company-specific risk be diversified away by investing in both Webster Financial and New York 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 New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and New York Community, you can compare the effects of market volatilities on Webster Financial and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and New York.
Diversification Opportunities for Webster Financial and New York
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Webster and New is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of Webster Financial i.e., Webster Financial and New York go up and down completely randomly.
Pair Corralation between Webster Financial and New York
Assuming the 90 days trading horizon Webster Financial is expected to under-perform the New York. But the preferred stock apears to be less risky and, when comparing its historical volatility, Webster Financial is 1.02 times less risky than New York. The preferred stock trades about -0.04 of its potential returns per unit of risk. The New York Community is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,093 in New York Community on September 1, 2024 and sell it today you would earn a total of 69.00 from holding New York Community or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Webster Financial vs. New York Community
Performance |
| Timeline |
| Webster Financial |
| New York Community |
Webster Financial and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and New York
The main advantage of trading using opposite Webster Financial and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| Webster Financial vs. KeyCorp | Webster Financial vs. Regions Financial | Webster Financial vs. US Bancorp | Webster Financial vs. KeyCorp |
| New York vs. Wintrust Financial Corp | New York vs. Pinnacle Financial Partners | New York vs. Associated Banc Corp | New York vs. WesBanco |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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