Correlation Between Washington Federal and Webster Financial
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Webster Financial 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 Washington Federal and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Webster Financial, you can compare the effects of market volatilities on Washington Federal and Webster Financial 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 Washington Federal with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Webster Financial.
Diversification Opportunities for Washington Federal and Webster Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Webster is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Washington Federal 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 Washington Federal are associated (or correlated) with Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of Washington Federal i.e., Washington Federal and Webster Financial go up and down completely randomly.
Pair Corralation between Washington Federal and Webster Financial
Given the investment horizon of 90 days Washington Federal is expected to generate 0.74 times more return on investment than Webster Financial. However, Washington Federal is 1.36 times less risky than Webster Financial. It trades about 0.03 of its potential returns per unit of risk. Webster Financial is currently generating about -0.03 per unit of risk. If you would invest 3,109 in Washington Federal on August 25, 2025 and sell it today you would earn a total of 64.00 from holding Washington Federal or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Webster Financial
Performance |
| Timeline |
| Washington Federal |
| Webster Financial |
Washington Federal and Webster Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Webster Financial
The main advantage of trading using opposite Washington Federal and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Webster Financial 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 Webster Financial will offset losses from the drop in Webster Financial's long position.| Washington Federal vs. Bar Harbor Bankshares | Washington Federal vs. Thrivent High Yield | Washington Federal vs. Morningstar Unconstrained Allocation | Washington Federal vs. Via Renewables |
| Webster Financial vs. First Horizon National | Webster Financial vs. Grupo Financiero Galicia | Webster Financial vs. Comerica Incorporated | Webster Financial vs. SouthState |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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