Correlation Between Webster Financial and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both Webster Financial and WESTERN DIGITAL 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 WESTERN DIGITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and WESTERN DIGITAL, you can compare the effects of market volatilities on Webster Financial and WESTERN DIGITAL 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 WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and WESTERN DIGITAL.
Diversification Opportunities for Webster Financial and WESTERN DIGITAL
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Webster and WESTERN is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Webster Financial i.e., Webster Financial and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between Webster Financial and WESTERN DIGITAL
Assuming the 90 days horizon Webster Financial is expected to generate 0.93 times more return on investment than WESTERN DIGITAL. However, Webster Financial is 1.07 times less risky than WESTERN DIGITAL. It trades about 0.07 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.07 per unit of risk. If you would invest 3,415 in Webster Financial on October 16, 2024 and sell it today you would earn a total of 1,885 from holding Webster Financial or generate 55.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. WESTERN DIGITAL
Performance |
| Timeline |
| Webster Financial |
| WESTERN DIGITAL |
Webster Financial and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and WESTERN DIGITAL
The main advantage of trading using opposite Webster Financial and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| Webster Financial vs. Japan Asia Investment | Webster Financial vs. JLF INVESTMENT | Webster Financial vs. AEON METALS LTD | Webster Financial vs. HK Electric Investments |
| WESTERN DIGITAL vs. Direct Line Insurance | WESTERN DIGITAL vs. CVB Financial Corp | WESTERN DIGITAL vs. REVO INSURANCE SPA | WESTERN DIGITAL vs. CDN IMPERIAL BANK |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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