Correlation Between Superior Plus and KeyCorp

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

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

Diversification Opportunities for Superior Plus and KeyCorp

-0.77

Correlation Coefficient

Superior Plus  KeyCorp

Pay attention - limited upside

The 3 months correlation between Superior and KeyCorp is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and KeyCorp go up and down completely randomly.

Pair Corralation between Superior Plus and KeyCorp

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the KeyCorp. In addition to that, Superior Plus is 1.22 times more volatile than KeyCorp. It trades about -0.07 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.12 per unit of volatility. If you would invest  1,229  in KeyCorp on September 19, 2024 and sell it today you would earn a total of  480.00  from holding KeyCorp or generate 39.06% return on investment over 90 days.

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

Superior Plus Corp  vs.  KeyCorp

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KeyCorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 10 (%) 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 Superior Plus and KeyCorp

The main advantage of trading using opposite Superior Plus and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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 Superior Plus Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.