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

0.61

Correlation Coefficient

UBS Group  East West

Poor diversification

The 3 months correlation between UBS and East is 0.61. 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 0.91 times more return on investment than East West. However, UBS Group AG is 1.09 times less risky than East West. It trades about -0.14 of its potential returns per unit of risk. East West Bancorp is currently generating about -0.17 per unit of risk. If you would invest  3,247  in UBS Group AG on January 8, 2025 and sell it today you would lose (635.00) from holding UBS Group AG or give up 19.56% of portfolio value 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

UBS Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

East West Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days East West Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

The idea behind UBS Group AG and East West Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.