Correlation Between ERShares Entrepreneurs and East West

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

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

Diversification Opportunities for ERShares Entrepreneurs and East West

0.0

Correlation Coefficient

ERShares Entrepreneurs  East West

Pay attention - limited upside

The 3 months correlation between ERShares and East is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ERShares Entrepreneurs ETF and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp and ERShares Entrepreneurs 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 ERShares Entrepreneurs ETF 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 Bancorp has no effect on the direction of ERShares Entrepreneurs i.e., ERShares Entrepreneurs and East West go up and down completely randomly.

Pair Corralation between ERShares Entrepreneurs and East West

If you would invest  1,547  in ERShares Entrepreneurs ETF on September 27, 2024 and sell it today you would earn a total of  0.00  from holding ERShares Entrepreneurs ETF or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

ERShares Entrepreneurs ETF  vs.  East West Bancorp

ERShares Entrepreneurs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ERShares Entrepreneurs ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ERShares Entrepreneurs is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

East West Bancorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East West Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, East West exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ERShares Entrepreneurs and East West

The main advantage of trading using opposite ERShares Entrepreneurs and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ERShares Entrepreneurs 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 ERShares Entrepreneurs ETF and East West Bancorp 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.