Correlation Between Citizens Bancorp and KEYCORP

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

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

Diversification Opportunities for Citizens Bancorp and KEYCORP

-0.16

Correlation Coefficient

Citizens Bancorp  KEYCORP

Good diversification

The 3 months correlation between Citizens and KEYCORP is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp Investment and KEYCORP MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MEDIUM TERM and Citizens 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 Citizens Bancorp Investment 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 MEDIUM TERM has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and KEYCORP go up and down completely randomly.

Pair Corralation between Citizens Bancorp and KEYCORP

Given the investment horizon of 90 days Citizens Bancorp Investment is expected to generate 0.99 times more return on investment than KEYCORP. However, Citizens Bancorp Investment is 1.01 times less risky than KEYCORP. It trades about 0.23 of its potential returns per unit of risk. KEYCORP MEDIUM TERM is currently generating about -0.18 per unit of risk. If you would invest  2,450  in Citizens Bancorp Investment on September 22, 2024 and sell it today you would earn a total of  105.00  from holding Citizens Bancorp Investment or generate 4.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citizens Bancorp Investment  vs.  KEYCORP MEDIUM TERM

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

KEYCORP MEDIUM TERM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MEDIUM TERM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEYCORP MEDIUM TERM investors.

Pair Trading with Citizens Bancorp and KEYCORP

The main advantage of trading using opposite Citizens Bancorp and KEYCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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 Citizens Bancorp Investment and KEYCORP MEDIUM TERM 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.