Correlation Between Bank of the and East West

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

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

Diversification Opportunities for Bank of the and East West

0.18

Correlation Coefficient

Bank of the  East West

Average diversification

The 3 months correlation between Bank and East is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and East West Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Banking and Bank of the 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 Bank of the are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Banking has no effect on the direction of Bank of the i.e., Bank of the and East West go up and down completely randomly.

Pair Corralation between Bank of the and East West

Assuming the 90 days trading horizon Bank of the is expected to generate 1.38 times less return on investment than East West. In addition to that, Bank of the is 1.69 times more volatile than East West Banking. It trades about 0.05 of its total potential returns per unit of risk. East West Banking is currently generating about 0.11 per unit of volatility. If you would invest  986.00  in East West Banking on November 29, 2024 and sell it today you would earn a total of  70.00  from holding East West Banking or generate 7.1% return on investment over 90 days.

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

Bank of the  vs.  East West Banking

Bank of the

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bank of the is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

East West Banking

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, East West may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bank of the and East West

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

The idea behind Bank of the and East West Banking 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.