Correlation Between Webster Financial and Indutrade
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Indutrade 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 Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Indutrade AB, you can compare the effects of market volatilities on Webster Financial and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Indutrade.
Diversification Opportunities for Webster Financial and Indutrade
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Webster and Indutrade is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Webster Financial i.e., Webster Financial and Indutrade go up and down completely randomly.
Pair Corralation between Webster Financial and Indutrade
Assuming the 90 days horizon Webster Financial is expected to under-perform the Indutrade. In addition to that, Webster Financial is 2.32 times more volatile than Indutrade AB. It trades about -0.29 of its total potential returns per unit of risk. Indutrade AB is currently generating about -0.14 per unit of volatility. If you would invest 2,430 in Indutrade AB on October 17, 2024 and sell it today you would lose (36.00) from holding Indutrade AB or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Indutrade AB
Performance |
| Timeline |
| Webster Financial |
| Indutrade AB |
Webster Financial and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Indutrade
The main advantage of trading using opposite Webster Financial and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| Webster Financial vs. CLEAN ENERGY FUELS | Webster Financial vs. Carnegie Clean Energy | Webster Financial vs. De Grey Mining | Webster Financial vs. Hua Hong Semiconductor |
| Indutrade vs. SENECA FOODS A | Indutrade vs. Webster Financial | Indutrade vs. Virtu Financial | Indutrade vs. Lifeway Foods |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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