Correlation Between Webster Financial and CAL MAINE

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

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

Diversification Opportunities for Webster Financial and CAL MAINE

0.69

Correlation Coefficient

Webster Financial  CAL MAINE

Poor diversification

The 3 months correlation between Webster and CAL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS 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 CAL MAINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of Webster Financial i.e., Webster Financial and CAL MAINE go up and down completely randomly.

Pair Corralation between Webster Financial and CAL MAINE

Assuming the 90 days horizon Webster Financial is expected to generate 1.38 times more return on investment than CAL MAINE. However, Webster Financial is 1.38 times more volatile than CAL MAINE FOODS. It trades about 0.19 of its potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.18 per unit of risk. If you would invest  3,829  in Webster Financial on April 22, 2025 and sell it today you would earn a total of  1,321  from holding Webster Financial or generate 34.5% return on investment over 90 days.

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

Webster Financial  vs.  CAL MAINE FOODS

Webster Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Webster Financial reported solid returns over the last few months and may actually be approaching a breakup point.

CAL MAINE FOODS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAL MAINE FOODS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAL MAINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Webster Financial and CAL MAINE

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

The idea behind Webster Financial and CAL MAINE FOODS 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.