Correlation Between De Grey and Webster Financial

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Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Webster Financial, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Webster Financial.

Diversification Opportunities for De Grey and Webster Financial

DGDWebsterDiversified AwayDGDWebsterDiversified Away100%
0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DGD and Webster is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and Webster Financial go up and down completely randomly.

Pair Corralation between De Grey and Webster Financial

Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.57 times more return on investment than Webster Financial. However, De Grey is 1.57 times more volatile than Webster Financial. It trades about 0.14 of its potential returns per unit of risk. Webster Financial is currently generating about 0.12 per unit of risk. If you would invest  86.00  in De Grey Mining on October 27, 2024 and sell it today you would earn a total of  33.00  from holding De Grey Mining or generate 38.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

De Grey Mining  vs.  Webster Financial

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 010203040
JavaScript chart by amCharts 3.21.15DGD WED
       Timeline  
De Grey Mining 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.80.850.90.9511.051.11.151.2
Webster Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Webster Financial reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan46485052545658

De Grey and Webster Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.14-9.84-6.54-3.240.03.366.9110.4513.9917.53 0.0100.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15DGD WED
       Returns  

Pair Trading with De Grey and Webster Financial

The main advantage of trading using opposite De Grey and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.
The idea behind De Grey Mining and Webster Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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