Correlation Between Webster Financial and GuocoLand
Can any of the company-specific risk be diversified away by investing in both Webster Financial and GuocoLand 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 GuocoLand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and GuocoLand Limited, you can compare the effects of market volatilities on Webster Financial and GuocoLand 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 GuocoLand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and GuocoLand.
Diversification Opportunities for Webster Financial and GuocoLand
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Webster and GuocoLand is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited 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 GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Webster Financial i.e., Webster Financial and GuocoLand go up and down completely randomly.
Pair Corralation between Webster Financial and GuocoLand
Assuming the 90 days horizon Webster Financial is expected to under-perform the GuocoLand. In addition to that, Webster Financial is 1.6 times more volatile than GuocoLand Limited. It trades about -0.22 of its total potential returns per unit of risk. GuocoLand Limited is currently generating about -0.12 per unit of volatility. If you would invest 106.00 in GuocoLand Limited on October 13, 2024 and sell it today you would lose (2.00) from holding GuocoLand Limited or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. GuocoLand Limited
Performance |
| Timeline |
| Webster Financial |
| GuocoLand Limited |
Webster Financial and GuocoLand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and GuocoLand
The main advantage of trading using opposite Webster Financial and GuocoLand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, GuocoLand 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 GuocoLand will offset losses from the drop in GuocoLand's long position.| Webster Financial vs. YATRA ONLINE DL 0001 | Webster Financial vs. Lamar Advertising | Webster Financial vs. TITAN MACHINERY | Webster Financial vs. Hanison Construction Holdings |
| GuocoLand vs. Webster Financial | GuocoLand vs. Sun Life Financial | GuocoLand vs. SUN LIFE FINANCIAL | GuocoLand vs. UNIQA INSURANCE GR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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