Correlation Between Webster Financial and Air Transport
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Air Transport Services, you can compare the effects of market volatilities on Webster Financial and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Air Transport.
Diversification Opportunities for Webster Financial and Air Transport
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Webster and Air is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Webster Financial i.e., Webster Financial and Air Transport go up and down completely randomly.
Pair Corralation between Webster Financial and Air Transport
Assuming the 90 days horizon Webster Financial is expected to generate 0.76 times more return on investment than Air Transport. However, Webster Financial is 1.32 times less risky than Air Transport. It trades about 0.07 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.03 per unit of risk. If you would invest 3,553 in Webster Financial on August 31, 2024 and sell it today you would earn a total of 2,297 from holding Webster Financial or generate 64.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Air Transport Services
Performance |
| Timeline |
| Webster Financial |
| Air Transport Services |
Webster Financial and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Air Transport
The main advantage of trading using opposite Webster Financial and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Webster Financial vs. Seven West Media | Webster Financial vs. Rayonier Advanced Materials | Webster Financial vs. Hollywood Bowl Group | Webster Financial vs. Eagle Materials |
| Air Transport vs. AENA SME UNSPADR110 | Air Transport vs. Superior Plus Corp | Air Transport vs. NMI Holdings | Air Transport vs. Origin Agritech |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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