Correlation Between Webster Financial and Acadia Realty
Can any of the company-specific risk be diversified away by investing in both Webster Financial and Acadia Realty 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 Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Acadia Realty Trust, you can compare the effects of market volatilities on Webster Financial and Acadia Realty 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 Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Acadia Realty.
Diversification Opportunities for Webster Financial and Acadia Realty
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Webster and Acadia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Webster Financial i.e., Webster Financial and Acadia Realty go up and down completely randomly.
Pair Corralation between Webster Financial and Acadia Realty
Assuming the 90 days horizon Webster Financial is expected to generate 2.28 times less return on investment than Acadia Realty. In addition to that, Webster Financial is 1.48 times more volatile than Acadia Realty Trust. It trades about 0.02 of its total potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.08 per unit of volatility. If you would invest 1,247 in Acadia Realty Trust on October 16, 2024 and sell it today you would earn a total of 933.00 from holding Acadia Realty Trust or generate 74.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webster Financial vs. Acadia Realty Trust
Performance |
| Timeline |
| Webster Financial |
| Acadia Realty Trust |
Webster Financial and Acadia Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Acadia Realty
The main advantage of trading using opposite Webster Financial and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.| Webster Financial vs. Shenandoah Telecommunications | Webster Financial vs. United Breweries Co | Webster Financial vs. Comba Telecom Systems | Webster Financial vs. Zoom Video Communications |
| Acadia Realty vs. Webster Financial | Acadia Realty vs. JSC Halyk bank | Acadia Realty vs. REVO INSURANCE SPA | Acadia Realty vs. MagnaChip Semiconductor Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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