Correlation Between Webster Financial and Embotelladora Andina
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Embotelladora Andina 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 Embotelladora Andina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Embotelladora Andina SA, you can compare the effects of market volatilities on Webster Financial and Embotelladora Andina 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 Embotelladora Andina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Embotelladora Andina.
Diversification Opportunities for Webster Financial and Embotelladora Andina
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Webster and Embotelladora is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Embotelladora Andina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embotelladora Andina 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 Embotelladora Andina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embotelladora Andina has no effect on the direction of Webster Financial i.e., Webster Financial and Embotelladora Andina go up and down completely randomly.
Pair Corralation between Webster Financial and Embotelladora Andina
Assuming the 90 days horizon Webster Financial is expected to generate 40.82 times less return on investment than Embotelladora Andina. But when comparing it to its historical volatility, Webster Financial is 1.42 times less risky than Embotelladora Andina. It trades about 0.01 of its potential returns per unit of risk. Embotelladora Andina SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,490 in Embotelladora Andina SA on September 14, 2024 and sell it today you would earn a total of 190.00 from holding Embotelladora Andina SA or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Embotelladora Andina SA
Performance |
| Timeline |
| Webster Financial |
| Embotelladora Andina |
Webster Financial and Embotelladora Andina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Embotelladora Andina
The main advantage of trading using opposite Webster Financial and Embotelladora Andina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Embotelladora Andina 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 Embotelladora Andina will offset losses from the drop in Embotelladora Andina's long position.| Webster Financial vs. Fifth Third Bancorp | Webster Financial vs. Regions Financial | Webster Financial vs. Superior Plus Corp | Webster Financial vs. SIVERS SEMICONDUCTORS AB |
| Embotelladora Andina vs. Tradegate AG Wertpapierhandelsbank | Embotelladora Andina vs. Webster Financial | Embotelladora Andina vs. KAUFMAN ET BROAD | Embotelladora Andina vs. Regions Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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