Correlation Between Webster Financial and ORIX JREIT

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

By analyzing existing cross correlation between Webster Financial and ORIX JREIT INC, you can compare the effects of market volatilities on Webster Financial and ORIX JREIT 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 ORIX JREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and ORIX JREIT.

Diversification Opportunities for Webster Financial and ORIX JREIT

0.88

Correlation Coefficient

Webster Financial  ORIX JREIT

Very poor diversification

The 3 months correlation between Webster and ORIX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC 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 ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of Webster Financial i.e., Webster Financial and ORIX JREIT go up and down completely randomly.

Pair Corralation between Webster Financial and ORIX JREIT

Assuming the 90 days horizon Webster Financial is expected to generate 1.84 times more return on investment than ORIX JREIT. However, Webster Financial is 1.84 times more volatile than ORIX JREIT INC. It trades about 0.03 of its potential returns per unit of risk. ORIX JREIT INC is currently generating about -0.03 per unit of risk. If you would invest  4,050  in Webster Financial on September 26, 2024 and sell it today you would earn a total of  1,250  from holding Webster Financial or generate 30.86% return on investment over 90 days.

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

Webster Financial  vs.  ORIX JREIT INC

Webster Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 11 (%) 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.

ORIX JREIT INC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Webster Financial and ORIX JREIT

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

The idea behind Webster Financial and ORIX JREIT INC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.