Correlation Between Ioneer and East West
Can any of the company-specific risk be diversified away by investing in both Ioneer 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 Ioneer and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ioneer Ltd American and East West Bancorp, you can compare the effects of market volatilities on Ioneer 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 Ioneer with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ioneer and East West.
Diversification Opportunities for Ioneer and East West
Good diversification
The 3 months correlation between Ioneer and East is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ioneer Ltd American 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 Ioneer 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 ioneer Ltd American 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 Ioneer i.e., Ioneer and East West go up and down completely randomly.
Pair Corralation between Ioneer and East West
Given the investment horizon of 90 days ioneer Ltd American is expected to under-perform the East West. In addition to that, Ioneer is 1.95 times more volatile than East West Bancorp. It trades about -0.02 of its total potential returns per unit of risk. East West Bancorp is currently generating about 0.04 per unit of volatility. If you would invest 7,082 in East West Bancorp on October 19, 2024 and sell it today you would earn a total of 2,998 from holding East West Bancorp or generate 42.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ioneer Ltd American vs. East West Bancorp
Performance |
| Timeline |
| ioneer American |
| East West Bancorp |
Ioneer and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ioneer and East West
The main advantage of trading using opposite Ioneer and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ioneer 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.| Ioneer vs. Qubec Nickel Corp | Ioneer vs. American Rare Earths | Ioneer vs. Cypress Development Corp | Ioneer vs. Jervois Mining |
| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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