Correlation Between Webster Financial and Cadence Bank

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

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

Diversification Opportunities for Webster Financial and Cadence Bank

0.21

Correlation Coefficient

Webster Financial  Cadence Bank

Modest diversification

The 3 months correlation between Webster and Cadence is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Webster Financial i.e., Webster Financial and Cadence Bank go up and down completely randomly.

Pair Corralation between Webster Financial and Cadence Bank

Considering the 90-day investment horizon Webster Financial is expected to generate 1.25 times less return on investment than Cadence Bank. In addition to that, Webster Financial is 2.52 times more volatile than Cadence Bank. It trades about 0.02 of its total potential returns per unit of risk. Cadence Bank is currently generating about 0.07 per unit of volatility. If you would invest  2,106  in Cadence Bank on August 1, 2025 and sell it today you would earn a total of  74.00  from holding Cadence Bank or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Webster Financial  vs.  Cadence Bank

Webster Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Cadence Bank

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cadence Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Webster Financial and Cadence Bank

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

The idea behind Webster Financial and Cadence Bank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.