Correlation Between East West and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both East West and Metropolitan 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 East West and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Banking and Metropolitan Bank Trust, you can compare the effects of market volatilities on East West and Metropolitan 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 East West with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Metropolitan Bank.
Diversification Opportunities for East West and Metropolitan Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between East and Metropolitan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust 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 Banking are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of East West i.e., East West and Metropolitan Bank go up and down completely randomly.
Pair Corralation between East West and Metropolitan Bank
Assuming the 90 days trading horizon East West Banking is expected to generate 0.68 times more return on investment than Metropolitan Bank. However, East West Banking is 1.47 times less risky than Metropolitan Bank. It trades about 0.08 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about 0.04 per unit of risk. If you would invest 660.00 in East West Banking on October 23, 2024 and sell it today you would earn a total of 339.00 from holding East West Banking or generate 51.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Banking vs. Metropolitan Bank Trust
Performance |
| Timeline |
| East West Banking |
| Metropolitan Bank Trust |
East West and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Metropolitan Bank
The main advantage of trading using opposite East West and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| East West vs. BDO Unibank | East West vs. Metropolitan Bank Trust | East West vs. Security Bank Corp | East West vs. Union Bank of |
| Metropolitan Bank vs. BDO Unibank | Metropolitan Bank vs. Security Bank Corp | Metropolitan Bank vs. Union Bank of | Metropolitan Bank vs. Philippine National Bank |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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