Correlation Between Bank of East and New World
Can any of the company-specific risk be diversified away by investing in both Bank of East and New World 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 East and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of East and New World Development, you can compare the effects of market volatilities on Bank of East and New World 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 East with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of East and New World.
Diversification Opportunities for Bank of East and New World
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and New is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank of East and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development and Bank of East 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 East are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Bank of East i.e., Bank of East and New World go up and down completely randomly.
Pair Corralation between Bank of East and New World
Assuming the 90 days horizon Bank of East is expected to generate 0.47 times more return on investment than New World. However, Bank of East is 2.14 times less risky than New World. It trades about 0.02 of its potential returns per unit of risk. New World Development is currently generating about -0.01 per unit of risk. If you would invest 118.00 in Bank of East on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Bank of East or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.91% |
| Values | Daily Returns |
Bank of East vs. New World Development
Performance |
| Timeline |
| Bank of East |
| New World Development |
Bank of East and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of East and New World
The main advantage of trading using opposite Bank of East and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of East position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Bank of East vs. First Foundation | Bank of East vs. Metropolitan Bank Holding | Bank of East vs. MT Bank | Bank of East vs. Regions Financial |
| New World vs. St Joe Company | New World vs. Secom Co Ltd | New World vs. Daiwa House Industry | New World vs. MSAD Insurance Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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