Correlation Between Ardelyx and KeyCorp

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

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

Diversification Opportunities for Ardelyx and KeyCorp

0.48

Correlation Coefficient

Ardelyx  KeyCorp

Very weak diversification

The 3 months correlation between Ardelyx and KeyCorp is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ardelyx and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Ardelyx 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 Ardelyx 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 Ardelyx i.e., Ardelyx and KeyCorp go up and down completely randomly.

Pair Corralation between Ardelyx and KeyCorp

Given the investment horizon of 90 days Ardelyx is expected to generate 6.0 times more return on investment than KeyCorp. However, Ardelyx is 6.0 times more volatile than KeyCorp. It trades about 0.09 of its potential returns per unit of risk. KeyCorp is currently generating about 0.17 per unit of risk. If you would invest  458.00  in Ardelyx on December 21, 2024 and sell it today you would earn a total of  91.00  from holding Ardelyx or generate 19.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Ardelyx  vs.  KeyCorp

Ardelyx

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ardelyx are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Ardelyx showed solid returns over the last few months and may actually be approaching a breakup point.

KeyCorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly sluggish basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ardelyx and KeyCorp

The main advantage of trading using opposite Ardelyx and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardelyx 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 Ardelyx 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 Global Correlations module to find global opportunities by holding instruments from different markets.