Correlation Between Webster Financial and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Walgreens Boots 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 Walgreens Boots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Walgreens Boots Alliance, you can compare the effects of market volatilities on Webster Financial and Walgreens Boots 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 Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Walgreens Boots.
Diversification Opportunities for Webster Financial and Walgreens Boots
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Webster and Walgreens is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Webster Financial i.e., Webster Financial and Walgreens Boots go up and down completely randomly.
Pair Corralation between Webster Financial and Walgreens Boots
Assuming the 90 days horizon Webster Financial is expected to generate 1.43 times more return on investment than Walgreens Boots. However, Webster Financial is 1.43 times more volatile than Walgreens Boots Alliance. It trades about 0.27 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about 0.01 per unit of risk. If you would invest 4,640 in Webster Financial on September 5, 2024 and sell it today you would earn a total of 1,160 from holding Webster Financial or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Webster Financial vs. Walgreens Boots Alliance
Performance |
| Timeline |
| Webster Financial |
| Walgreens Boots Alliance |
Webster Financial and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Walgreens Boots
The main advantage of trading using opposite Webster Financial and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.| Webster Financial vs. The PNC Financial | Webster Financial vs. Fifth Third Bancorp | Webster Financial vs. Regions Financial |
| Walgreens Boots vs. Webster Financial | Walgreens Boots vs. BE Semiconductor Industries | Walgreens Boots vs. MagnaChip Semiconductor Corp | Walgreens Boots vs. VIRG NATL BANKSH |
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 CEOs Directory module to screen CEOs from public companies around the world.
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