Correlation Between Celestica and KEYBANK

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

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

Diversification Opportunities for Celestica and KEYBANK

0.73

Correlation Coefficient

Celestica  KEYBANK

Poor diversification

The 3 months correlation between Celestica and KEYBANK is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Celestica 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 Celestica 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 Celestica 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 Celestica i.e., Celestica and KEYBANK go up and down completely randomly.

Pair Corralation between Celestica and KEYBANK

Considering the 90-day investment horizon Celestica is expected to generate 4.65 times more return on investment than KEYBANK. However, Celestica is 4.65 times more volatile than KEYBANK NATL ASSN. It trades about 0.13 of its potential returns per unit of risk. KEYBANK NATL ASSN is currently generating about -0.27 per unit of risk. If you would invest  8,496  in Celestica on October 3, 2024 and sell it today you would earn a total of  734.00  from holding Celestica or generate 8.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.0%
Values	Daily Returns

Celestica  vs.  KEYBANK NATL ASSN

Celestica

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KEYBANK NATL ASSN investors.

Pair Trading with Celestica and KEYBANK

The main advantage of trading using opposite Celestica and KEYBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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 Celestica 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.