Correlation Between East West and Bloomberry Resorts

Can any of the company-specific risk be diversified away by investing in both East West and Bloomberry Resorts 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 East West and Bloomberry Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between East West Banking and Bloomberry Resorts Corp, you can compare the effects of market volatilities on East West and Bloomberry Resorts 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 East West with a short position of Bloomberry Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Bloomberry Resorts.

Diversification Opportunities for East West and Bloomberry Resorts

0.24

Correlation Coefficient

East West  Bloomberry Resorts

Modest diversification

The 3 months correlation between East and Bloomberry is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and Bloomberry Resorts Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomberry Resorts Corp and East West 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 East West Banking are associated (or correlated) with Bloomberry Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomberry Resorts Corp has no effect on the direction of East West i.e., East West and Bloomberry Resorts go up and down completely randomly.

Pair Corralation between East West and Bloomberry Resorts

Assuming the 90 days trading horizon East West Banking is expected to generate 0.45 times more return on investment than Bloomberry Resorts. However, East West Banking is 2.21 times less risky than Bloomberry Resorts. It trades about 0.02 of its potential returns per unit of risk. Bloomberry Resorts Corp is currently generating about -0.37 per unit of risk. If you would invest  976.00  in East West Banking on September 29, 2024 and sell it today you would earn a total of  9.00  from holding East West Banking or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

East West Banking  vs.  Bloomberry Resorts Corp

East West Banking

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in East West Banking are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, East West is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bloomberry Resorts Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomberry Resorts Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with East West and Bloomberry Resorts

The main advantage of trading using opposite East West and Bloomberry Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Bloomberry Resorts 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 Bloomberry Resorts will offset losses from the drop in Bloomberry Resorts' long position.

The idea behind East West Banking and Bloomberry Resorts Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.