Correlation Between UBS Group and East West
Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and East West Bancorp, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and East West.
Diversification Opportunities for UBS Group and East West
Poor diversification
The 3 months correlation between UBS and East is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG 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 UBS Group 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 UBS Group AG 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 UBS Group i.e., UBS Group and East West go up and down completely randomly.
Pair Corralation between UBS Group and East West
Considering the 90-day investment horizon UBS Group AG is expected to generate 0.73 times more return on investment than East West. However, UBS Group AG is 1.38 times less risky than East West. It trades about 0.08 of its potential returns per unit of risk. East West Bancorp is currently generating about 0.05 per unit of risk. If you would invest 1,730 in UBS Group AG on August 23, 2024 and sell it today you would earn a total of 1,444 from holding UBS Group AG or generate 83.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. East West Bancorp
Performance |
| Timeline |
| UBS Group AG |
| East West Bancorp |
UBS Group and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and East West
The main advantage of trading using opposite UBS Group and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.| UBS Group vs. Citigroup | UBS Group vs. Barclays PLC ADR | UBS Group vs. HSBC Holdings PLC | UBS Group vs. Nu Holdings |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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