Correlation Between Transpacific Broadband and East West
Can any of the company-specific risk be diversified away by investing in both Transpacific Broadband 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 Transpacific Broadband and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transpacific Broadband Group and East West Banking, you can compare the effects of market volatilities on Transpacific Broadband 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 Transpacific Broadband with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transpacific Broadband and East West.
Diversification Opportunities for Transpacific Broadband and East West
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transpacific and East is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Transpacific Broadband Group 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 Transpacific Broadband 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 Transpacific Broadband Group 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 Transpacific Broadband i.e., Transpacific Broadband and East West go up and down completely randomly.
Pair Corralation between Transpacific Broadband and East West
Assuming the 90 days trading horizon Transpacific Broadband Group is expected to under-perform the East West. In addition to that, Transpacific Broadband is 3.16 times more volatile than East West Banking. It trades about 0.0 of its total potential returns per unit of risk. East West Banking is currently generating about 0.09 per unit of volatility. If you would invest 674.00 in East West Banking on August 31, 2024 and sell it today you would earn a total of 306.00 from holding East West Banking or generate 45.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
Transpacific Broadband Group vs. East West Banking
Performance |
| Timeline |
| Transpacific Broadband |
| East West Banking |
Transpacific Broadband and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transpacific Broadband and East West
The main advantage of trading using opposite Transpacific Broadband and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transpacific Broadband 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.| Transpacific Broadband vs. Top Frontier Investment | Transpacific Broadband vs. Metro Retail Stores | Transpacific Broadband vs. Cebu Air Preferred | Transpacific Broadband vs. Atlas Consolidated Mining |
| East West vs. Metropolitan Bank Trust | East West vs. Philippine National Bank | East West vs. Asia United Bank | East West vs. Philippine Savings 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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