Correlation Between Philippine Savings and East West
Can any of the company-specific risk be diversified away by investing in both Philippine Savings 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 Philippine Savings and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Philippine Savings Bank and East West Banking, you can compare the effects of market volatilities on Philippine Savings 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 Philippine Savings with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philippine Savings and East West.
Diversification Opportunities for Philippine Savings and East West
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Philippine and East is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Philippine Savings Bank and East West Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Banking and Philippine Savings 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 Philippine Savings Bank 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 Banking has no effect on the direction of Philippine Savings i.e., Philippine Savings and East West go up and down completely randomly.
Pair Corralation between Philippine Savings and East West
Assuming the 90 days trading horizon Philippine Savings is expected to generate 1.0 times less return on investment than East West. In addition to that, Philippine Savings is 1.31 times more volatile than East West Banking. It trades about 0.08 of its total potential returns per unit of risk. East West Banking is currently generating about 0.1 per unit of volatility. If you would invest 901.00 in East West Banking on August 28, 2024 and sell it today you would earn a total of 75.00 from holding East West Banking or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philippine Savings Bank vs. East West Banking
Performance |
| Timeline |
| Philippine Savings Bank |
| East West Banking |
Philippine Savings and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philippine Savings and East West
The main advantage of trading using opposite Philippine Savings and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philippine Savings 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.| Philippine Savings vs. Allhome Corp | Philippine Savings vs. Semirara Mining Corp | Philippine Savings vs. SM Investments Corp | Philippine Savings vs. Top Frontier Investment |
| East West vs. Apex Mining Co | East West vs. Atlas Consolidated Mining | East West vs. Transpacific Broadband Group | East West vs. Philex Mining Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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