Correlation Between Webster Financial and Tectonic Financial

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

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

Diversification Opportunities for Webster Financial and Tectonic Financial

-0.72

Correlation Coefficient

Webster Financial  Tectonic Financial

Pay attention - limited upside

The 3 months correlation between Webster and Tectonic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Financial 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of Webster Financial i.e., Webster Financial and Tectonic Financial go up and down completely randomly.

Pair Corralation between Webster Financial and Tectonic Financial

Assuming the 90 days trading horizon Webster Financial is expected to generate 1.77 times less return on investment than Tectonic Financial. In addition to that, Webster Financial is 1.47 times more volatile than Tectonic Financial PR. It trades about 0.03 of its total potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.07 per unit of volatility. If you would invest  950.00  in Tectonic Financial PR on October 8, 2024 and sell it today you would earn a total of  89.00  from holding Tectonic Financial PR or generate 9.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Webster Financial  vs.  Tectonic Financial PR

Webster Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Webster Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Preferred Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tectonic Financial

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Webster Financial and Tectonic Financial

The main advantage of trading using opposite Webster Financial and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial position performs unexpectedly, Tectonic 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 Tectonic Financial will offset losses from the drop in Tectonic Financial's long position.

The idea behind Webster Financial and Tectonic Financial PR 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.