Correlation Between CF Financial and KeyCorp

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

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

Diversification Opportunities for CF Financial and KeyCorp

0.19

Correlation Coefficient

CF Financial  KeyCorp

Average diversification

The 3 months correlation between CFFI and KeyCorp is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CF Financial and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and CF Financial 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 CF Financial 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 CF Financial i.e., CF Financial and KeyCorp go up and down completely randomly.

Pair Corralation between CF Financial and KeyCorp

Given the investment horizon of 90 days CF Financial is expected to generate 1.59 times more return on investment than KeyCorp. However, CF Financial is 1.59 times more volatile than KeyCorp. It trades about 0.07 of its potential returns per unit of risk. KeyCorp is currently generating about -0.14 per unit of risk. If you would invest  7,157  in CF Financial on November 29, 2024 and sell it today you would earn a total of  683.00  from holding CF Financial or generate 9.54% return on investment over 90 days.

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

CF Financial  vs.  KeyCorp

CF Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CF Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, CF Financial may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CF Financial and KeyCorp

The main advantage of trading using opposite CF Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Financial 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 CF Financial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.