Correlation Between Webster Financial and New Residential
Can any of the company-specific risk be diversified away by investing in both Webster Financial and New Residential 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 Residential 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 Residential Investment, you can compare the effects of market volatilities on Webster Financial and New Residential 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 Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and New Residential.
Diversification Opportunities for Webster Financial and New Residential
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Webster and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Webster Financial i.e., Webster Financial and New Residential go up and down completely randomly.
Pair Corralation between Webster Financial and New Residential
Assuming the 90 days horizon Webster Financial is expected to generate 1.21 times less return on investment than New Residential. In addition to that, Webster Financial is 1.84 times more volatile than New Residential Investment. It trades about 0.03 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.07 per unit of volatility. If you would invest 672.00 in New Residential Investment on August 27, 2024 and sell it today you would earn a total of 380.00 from holding New Residential Investment or generate 56.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. New Residential Investment
Performance |
| Timeline |
| Webster Financial |
| New Residential Inve |
Webster Financial and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and New Residential
The main advantage of trading using opposite Webster Financial and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, New Residential 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 Residential will offset losses from the drop in New Residential's long position.| Webster Financial vs. Platinum Investment Management | Webster Financial vs. Sporttotal AG | Webster Financial vs. BII Railway Transportation | Webster Financial vs. SPORTING |
| New Residential vs. Richardson Electronics | New Residential vs. ITALIAN WINE BRANDS | New Residential vs. Goodyear Tire Rubber | New Residential vs. Vulcan 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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