Correlation Between Webster Financial and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Capri Holdings 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 Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Capri Holdings Limited, you can compare the effects of market volatilities on Webster Financial and Capri Holdings 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 Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Capri Holdings.
Diversification Opportunities for Webster Financial and Capri Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Webster and Capri is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings 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 Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Webster Financial i.e., Webster Financial and Capri Holdings go up and down completely randomly.
Pair Corralation between Webster Financial and Capri Holdings
Assuming the 90 days horizon Webster Financial is expected to generate 0.6 times more return on investment than Capri Holdings. However, Webster Financial is 1.65 times less risky than Capri Holdings. It trades about 0.04 of its potential returns per unit of risk. Capri Holdings Limited is currently generating about -0.02 per unit of risk. If you would invest 4,032 in Webster Financial on September 16, 2024 and sell it today you would earn a total of 1,618 from holding Webster Financial or generate 40.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Capri Holdings Limited
Performance |
| Timeline |
| Webster Financial |
| Capri Holdings |
Webster Financial and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Capri Holdings
The main advantage of trading using opposite Webster Financial and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.| Webster Financial vs. Clean Energy Fuels | Webster Financial vs. Ross Stores | Webster Financial vs. NORTHEAST UTILITIES | Webster Financial vs. PICKN PAY STORES |
| Capri Holdings vs. Electronic Arts | Capri Holdings vs. Webster Financial | Capri Holdings vs. Samsung Electronics Co | Capri Holdings vs. SWISS WATER DECAFFCOFFEE |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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