Correlation Between BCB Bancorp and KeyCorp

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

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

Diversification Opportunities for BCB Bancorp and KeyCorp

-0.01

Correlation Coefficient

BCB Bancorp  KeyCorp

Good diversification

The 3 months correlation between BCB and KeyCorp is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp i.e., BCB Bancorp and KeyCorp go up and down completely randomly.

Pair Corralation between BCB Bancorp and KeyCorp

Given the investment horizon of 90 days BCB Bancorp is expected to generate 2.96 times more return on investment than KeyCorp. However, BCB Bancorp is 2.96 times more volatile than KeyCorp. It trades about 0.01 of its potential returns per unit of risk. KeyCorp is currently generating about -0.11 per unit of risk. If you would invest  1,201  in BCB Bancorp on September 24, 2024 and sell it today you would earn a total of  6.00  from holding BCB Bancorp or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

BCB Bancorp  vs.  KeyCorp

BCB Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BCB Bancorp and KeyCorp

The main advantage of trading using opposite BCB Bancorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp 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 BCB Bancorp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.