Correlation Between Associated Banc and KeyCorp

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

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

Diversification Opportunities for Associated Banc and KeyCorp

-0.48

Correlation Coefficient

Associated Banc  KeyCorp

Very good diversification

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

Pair Corralation between Associated Banc and KeyCorp

Assuming the 90 days trading horizon Associated Banc Corp is expected to under-perform the KeyCorp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Associated Banc Corp is 1.28 times less risky than KeyCorp. The preferred stock trades about -0.09 of its potential returns per unit of risk. The KeyCorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,255  in KeyCorp on September 14, 2024 and sell it today you would earn a total of  20.00  from holding KeyCorp or generate 0.89% return on investment over 90 days.

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

Associated Banc Corp  vs.  KeyCorp

Associated Banc Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Banc Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Associated Banc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

KeyCorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Associated Banc and KeyCorp

The main advantage of trading using opposite Associated Banc and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Banc 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 Associated Banc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.