Correlation Between Webster Financial and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Plastic Omnium 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 Plastic Omnium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Plastic Omnium, you can compare the effects of market volatilities on Webster Financial and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Plastic Omnium.
Diversification Opportunities for Webster Financial and Plastic Omnium
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Webster and Plastic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Webster Financial i.e., Webster Financial and Plastic Omnium go up and down completely randomly.
Pair Corralation between Webster Financial and Plastic Omnium
Assuming the 90 days horizon Webster Financial is expected to under-perform the Plastic Omnium. But the stock apears to be less risky and, when comparing its historical volatility, Webster Financial is 1.48 times less risky than Plastic Omnium. The stock trades about -0.13 of its potential returns per unit of risk. The Plastic Omnium is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 789.00 in Plastic Omnium on September 22, 2024 and sell it today you would earn a total of 188.00 from holding Plastic Omnium or generate 23.83% 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. Plastic Omnium
Performance |
| Timeline |
| Webster Financial |
| Plastic Omnium |
Webster Financial and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Plastic Omnium
The main advantage of trading using opposite Webster Financial and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Webster Financial vs. Safety Insurance Group | Webster Financial vs. Direct Line Insurance | Webster Financial vs. Universal Insurance Holdings | Webster Financial vs. Zijin Mining Group |
| Plastic Omnium vs. OAKTRSPECLENDNEW | Plastic Omnium vs. Webster Financial | Plastic Omnium vs. REVO INSURANCE SPA | Plastic Omnium vs. Magnachip Semiconductor |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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