Correlation Between East West and Popular
Can any of the company-specific risk be diversified away by investing in both East West and Popular 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 Popular 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 Popular, you can compare the effects of market volatilities on East West and Popular 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 Popular. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Popular.
Diversification Opportunities for East West and Popular
Very good diversification
The 3 months correlation between East and Popular is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding East West Bancorp and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular 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 Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of East West i.e., East West and Popular go up and down completely randomly.
Pair Corralation between East West and Popular
Given the investment horizon of 90 days East West Bancorp is expected to generate 0.98 times more return on investment than Popular. However, East West Bancorp is 1.02 times less risky than Popular. It trades about 0.22 of its potential returns per unit of risk. Popular is currently generating about 0.21 per unit of risk. If you would invest 9,828 in East West Bancorp on August 28, 2024 and sell it today you would earn a total of 1,295 from holding East West Bancorp or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Bancorp vs. Popular
Performance |
| Timeline |
| East West Bancorp |
| Popular |
East West and Popular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Popular
The main advantage of trading using opposite East West and Popular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Popular 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 Popular will offset losses from the drop in Popular's long position.| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
| Popular vs. OFG Bancorp | Popular vs. The First Bancshares, | Popular vs. First Commonwealth Financial | Popular vs. First Bancorp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |