Correlation Between Webster Financial and Chuangs China
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Chuangs China 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 Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Chuangs China Investments, you can compare the effects of market volatilities on Webster Financial and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Chuangs China.
Diversification Opportunities for Webster Financial and Chuangs China
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Webster and Chuangs is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of Webster Financial i.e., Webster Financial and Chuangs China go up and down completely randomly.
Pair Corralation between Webster Financial and Chuangs China
Assuming the 90 days horizon Webster Financial is expected to generate 0.45 times more return on investment than Chuangs China. However, Webster Financial is 2.21 times less risky than Chuangs China. It trades about 0.04 of its potential returns per unit of risk. Chuangs China Investments is currently generating about -0.01 per unit of risk. If you would invest 4,069 in Webster Financial on September 12, 2024 and sell it today you would earn a total of 1,581 from holding Webster Financial or generate 38.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Chuangs China Investments
Performance |
| Timeline |
| Webster Financial |
| Chuangs China Investments |
Webster Financial and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Chuangs China
The main advantage of trading using opposite Webster Financial and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China'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 |
| Chuangs China vs. RCM TECHNOLOGIES | Chuangs China vs. Spirent Communications plc | Chuangs China vs. CITIC Telecom International | Chuangs China vs. Lion Biotechnologies |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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