Correlation Between Webster Financial and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Teradata Corp 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 Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Teradata Corp, you can compare the effects of market volatilities on Webster Financial and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Teradata Corp.
Diversification Opportunities for Webster Financial and Teradata Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Webster and Teradata is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Webster Financial i.e., Webster Financial and Teradata Corp go up and down completely randomly.
Pair Corralation between Webster Financial and Teradata Corp
Assuming the 90 days horizon Webster Financial is expected to under-perform the Teradata Corp. In addition to that, Webster Financial is 1.24 times more volatile than Teradata Corp. It trades about -0.04 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.18 per unit of volatility. If you would invest 2,780 in Teradata Corp on October 16, 2024 and sell it today you would earn a total of 240.00 from holding Teradata Corp or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Teradata Corp
Performance |
| Timeline |
| Webster Financial |
| Teradata Corp |
Webster Financial and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Teradata Corp
The main advantage of trading using opposite Webster Financial and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Webster Financial vs. Japan Asia Investment | Webster Financial vs. JLF INVESTMENT | Webster Financial vs. AEON METALS LTD | Webster Financial vs. HK Electric Investments |
| Teradata Corp vs. UNITED RENTALS | Teradata Corp vs. Webster Financial | Teradata Corp vs. REVO INSURANCE SPA | Teradata Corp vs. Direct Line Insurance |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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