Correlation Between Generations Bancorp and Webster Financial

Can any of the company-specific risk be diversified away by investing in both Generations Bancorp 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 Generations Bancorp and Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Generations Bancorp NY and Webster Financial, you can compare the effects of market volatilities on Generations Bancorp 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 Generations Bancorp with a short position of Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generations Bancorp and Webster Financial.

Diversification Opportunities for Generations Bancorp and Webster Financial

0.36

Correlation Coefficient

Generations Bancorp  Webster Financial

Weak diversification

The 3 months correlation between Generations and Webster is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Generations Bancorp NY and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Generations Bancorp 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 Generations Bancorp NY 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 Generations Bancorp i.e., Generations Bancorp and Webster Financial go up and down completely randomly.

Pair Corralation between Generations Bancorp and Webster Financial

If you would invest  5,109  in Webster Financial on September 21, 2024 and sell it today you would earn a total of  304.00  from holding Webster Financial or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	2.33%
Values	Daily Returns

Generations Bancorp NY  vs.  Webster Financial

Generations Bancorp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Generations Bancorp NY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Generations Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Webster Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Webster Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generations Bancorp and Webster Financial

The main advantage of trading using opposite Generations Bancorp and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generations Bancorp 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 Generations Bancorp NY 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.