Correlation Between Banco Macro and KeyCorp

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

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

Diversification Opportunities for Banco Macro and KeyCorp

0.56

Correlation Coefficient

Banco Macro  KeyCorp

Very weak diversification

The 3 months correlation between Banco and KeyCorp is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Banco Macro SA and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Banco Macro 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 Banco Macro SA 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 Banco Macro i.e., Banco Macro and KeyCorp go up and down completely randomly.

Pair Corralation between Banco Macro and KeyCorp

Considering the 90-day investment horizon Banco Macro SA is expected to under-perform the KeyCorp. In addition to that, Banco Macro is 2.3 times more volatile than KeyCorp. It trades about -0.07 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.04 per unit of volatility. If you would invest  1,699  in KeyCorp on December 27, 2024 and sell it today you would lose (82.00) from holding KeyCorp or give up 4.83% of portfolio value over 90 days.

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

Banco Macro SA  vs.  KeyCorp

Banco Macro SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Macro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KeyCorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, KeyCorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Macro and KeyCorp

The main advantage of trading using opposite Banco Macro and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Macro 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 Banco Macro SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.