Correlation Between Citigroup and KEYBANK

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

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

Diversification Opportunities for Citigroup and KEYBANK

0.35

Correlation Coefficient

Citigroup  KEYBANK

Weak diversification

The 3 months correlation between Citigroup and KEYBANK is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KEYBANK NATL ASSN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYBANK NATL ASSN and Citigroup 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 Citigroup are associated (or correlated) with KEYBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYBANK NATL ASSN has no effect on the direction of Citigroup i.e., Citigroup and KEYBANK go up and down completely randomly.

Pair Corralation between Citigroup and KEYBANK

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the KEYBANK. In addition to that, Citigroup is 10.48 times more volatile than KEYBANK NATL ASSN. It trades about -0.04 of its total potential returns per unit of risk. KEYBANK NATL ASSN is currently generating about 0.03 per unit of volatility. If you would invest  9,784  in KEYBANK NATL ASSN on September 19, 2024 and sell it today you would earn a total of  5.00  from holding KEYBANK NATL ASSN or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.27%
Values	Daily Returns

Citigroup  vs.  KEYBANK NATL ASSN

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KEYBANK NATL ASSN

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KEYBANK NATL ASSN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KEYBANK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and KEYBANK

The main advantage of trading using opposite Citigroup and KEYBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, KEYBANK 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 KEYBANK will offset losses from the drop in KEYBANK's long position.

The idea behind Citigroup and KEYBANK NATL ASSN 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.