Correlation Between VIRG NATL and KeyCorp

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

By analyzing existing cross correlation between VIRG NATL BANKSH and KeyCorp, you can compare the effects of market volatilities on VIRG NATL and KeyCorp 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 VIRG NATL with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRG NATL and KeyCorp.

Diversification Opportunities for VIRG NATL and KeyCorp

0.7

Correlation Coefficient

VIRG NATL  KeyCorp

Poor diversification

The 3 months correlation between VIRG and KeyCorp is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and VIRG NATL 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 VIRG NATL BANKSH are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of VIRG NATL i.e., VIRG NATL and KeyCorp go up and down completely randomly.

Pair Corralation between VIRG NATL and KeyCorp

Assuming the 90 days horizon VIRG NATL BANKSH is expected to under-perform the KeyCorp. In addition to that, VIRG NATL is 1.59 times more volatile than KeyCorp. It trades about -0.01 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.11 per unit of volatility. If you would invest  1,461  in KeyCorp on October 1, 2024 and sell it today you would earn a total of  191.00  from holding KeyCorp or generate 13.07% return on investment over 90 days.

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

VIRG NATL BANKSH  vs.  KeyCorp

VIRG NATL BANKSH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIRG NATL BANKSH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VIRG NATL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

KeyCorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KeyCorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIRG NATL and KeyCorp

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

The idea behind VIRG NATL BANKSH and KeyCorp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..