Correlation Between Webster Financial and Ares Management
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Ares Management 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 Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Ares Management Corp, you can compare the effects of market volatilities on Webster Financial and Ares Management 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 Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Ares Management.
Diversification Opportunities for Webster Financial and Ares Management
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Webster and Ares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Webster Financial i.e., Webster Financial and Ares Management go up and down completely randomly.
Pair Corralation between Webster Financial and Ares Management
Assuming the 90 days horizon Webster Financial is expected to generate 2.12 times less return on investment than Ares Management. In addition to that, Webster Financial is 1.34 times more volatile than Ares Management Corp. It trades about 0.04 of its total potential returns per unit of risk. Ares Management Corp is currently generating about 0.11 per unit of volatility. If you would invest 6,579 in Ares Management Corp on October 11, 2024 and sell it today you would earn a total of 10,251 from holding Ares Management Corp or generate 155.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Ares Management Corp
Performance |
| Timeline |
| Webster Financial |
| Ares Management Corp |
Webster Financial and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Ares Management
The main advantage of trading using opposite Webster Financial and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Webster Financial vs. Sunstone Hotel Investors | Webster Financial vs. Cleanaway Waste Management | Webster Financial vs. Coor Service Management | Webster Financial vs. Wyndham Hotels Resorts |
| Ares Management vs. PLAYMATES TOYS | Ares Management vs. Penn National Gaming | Ares Management vs. GigaMedia | Ares Management vs. China Eastern Airlines |
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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