Correlation Between Huntington Bancshares and Webster Financial

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

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

Diversification Opportunities for Huntington Bancshares and Webster Financial

0.18

Correlation Coefficient

Huntington Bancshares  Webster Financial

Average diversification

The 3 months correlation between Huntington and Webster is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Huntington Bancshares i.e., Huntington Bancshares and Webster Financial go up and down completely randomly.

Pair Corralation between Huntington Bancshares and Webster Financial

Assuming the 90 days horizon Huntington Bancshares Incorporated is expected to generate 0.82 times more return on investment than Webster Financial. However, Huntington Bancshares Incorporated is 1.21 times less risky than Webster Financial. It trades about -0.05 of its potential returns per unit of risk. Webster Financial is currently generating about -0.09 per unit of risk. If you would invest  2,416  in Huntington Bancshares Incorporated on September 14, 2024 and sell it today you would lose (70.00) from holding Huntington Bancshares Incorporated or give up 2.9% of portfolio value over 90 days.

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

Huntington Bancshares Incorpor  vs.  Webster Financial

Huntington Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Bancshares Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Huntington Bancshares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 nearly stable basic indicators, Webster Financial is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Huntington Bancshares and Webster Financial

The main advantage of trading using opposite Huntington Bancshares and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.