Correlation Between East West and Partner Communications
Can any of the company-specific risk be diversified away by investing in both East West and Partner Communications 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 East West and Partner Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Bancorp and Partner Communications, you can compare the effects of market volatilities on East West and Partner Communications 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 East West with a short position of Partner Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Partner Communications.
Diversification Opportunities for East West and Partner Communications
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Partner is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding East West Bancorp and Partner Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partner Communications and East West 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 East West Bancorp are associated (or correlated) with Partner Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partner Communications has no effect on the direction of East West i.e., East West and Partner Communications go up and down completely randomly.
Pair Corralation between East West and Partner Communications
Given the investment horizon of 90 days East West Bancorp is expected to under-perform the Partner Communications. But the stock apears to be less risky and, when comparing its historical volatility, East West Bancorp is 4.85 times less risky than Partner Communications. The stock trades about -0.14 of its potential returns per unit of risk. The Partner Communications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 500.00 in Partner Communications on December 1, 2024 and sell it today you would earn a total of 230.00 from holding Partner Communications or generate 46.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
East West Bancorp vs. Partner Communications
Performance |
Timeline |
East West Bancorp |
Partner Communications |
East West and Partner Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with East West and Partner Communications
The main advantage of trading using opposite East West and Partner Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Partner Communications 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 Partner Communications will offset losses from the drop in Partner Communications' long position.East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
Partner Communications vs. Apple Inc | Partner Communications vs. NVIDIA | Partner Communications vs. Microsoft | Partner Communications vs. Amazon Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |