Correlation Between Capital Clean and KEYCORP

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

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

Diversification Opportunities for Capital Clean and KEYCORP

-0.35

Correlation Coefficient

Capital Clean  KEYCORP

Very good diversification

The 3 months correlation between Capital and KEYCORP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy 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 Capital Clean 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 Capital Clean Energy 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 Capital Clean i.e., Capital Clean and KEYCORP go up and down completely randomly.

Pair Corralation between Capital Clean and KEYCORP

Given the investment horizon of 90 days Capital Clean Energy is expected to generate 3.73 times more return on investment than KEYCORP. However, Capital Clean is 3.73 times more volatile than KEYCORP MEDIUM TERM. It trades about 0.09 of its potential returns per unit of risk. KEYCORP MEDIUM TERM is currently generating about 0.0 per unit of risk. If you would invest  1,808  in Capital Clean Energy on December 11, 2024 and sell it today you would earn a total of  142.00  from holding Capital Clean Energy or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Capital Clean Energy  vs.  KEYCORP MEDIUM TERM

Capital Clean Energy

Risk-Adjusted Performance

Modest

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

KEYCORP MEDIUM TERM

Risk-Adjusted Performance

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 somewhat strong basic 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 Capital Clean and KEYCORP

The main advantage of trading using opposite Capital Clean and KEYCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean 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 Capital Clean Energy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.