Correlation Between WesBanco and Webster Financial

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

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

Diversification Opportunities for WesBanco and Webster Financial

0.66

Correlation Coefficient

WesBanco  Webster Financial

Poor diversification

The 3 months correlation between WesBanco and Webster is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WesBanco and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial and WesBanco 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 WesBanco 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 WesBanco i.e., WesBanco and Webster Financial go up and down completely randomly.

Pair Corralation between WesBanco and Webster Financial

Given the investment horizon of 90 days WesBanco is expected to generate 0.99 times more return on investment than Webster Financial. However, WesBanco is 1.01 times less risky than Webster Financial. It trades about -0.01 of its potential returns per unit of risk. Webster Financial is currently generating about -0.04 per unit of risk. If you would invest  3,225  in WesBanco on August 26, 2025 and sell it today you would lose (72.00) from holding WesBanco or give up 2.23% of portfolio value over 90 days.

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

WesBanco  vs.  Webster Financial

WesBanco

Risk-Adjusted Performance

Weakest

Over the last 90 days WesBanco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, WesBanco is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Webster Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days Webster Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Webster Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WesBanco and Webster Financial

The main advantage of trading using opposite WesBanco and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WesBanco 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 WesBanco 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.