Correlation Between Disney and KEYBANK

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

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

Diversification Opportunities for Disney and KEYBANK

0.9

Correlation Coefficient

Disney  KEYBANK

Almost no diversification

The 3 months correlation between Disney and KEYBANK is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and KEYBANK go up and down completely randomly.

Pair Corralation between Disney and KEYBANK

Considering the 90-day investment horizon Disney is expected to generate 4.53 times less return on investment than KEYBANK. In addition to that, Disney is 2.9 times more volatile than KEYBANK NATL ASSN. It trades about 0.0 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  9,406  in KEYBANK NATL ASSN on October 9, 2024 and sell it today you would earn a total of  140.00  from holding KEYBANK NATL ASSN or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	56.45%
Values	Daily Returns

Walt Disney  vs.  KEYBANK NATL ASSN

Walt Disney

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Disney 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 somewhat strong basic indicators, KEYBANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and KEYBANK

The main advantage of trading using opposite Disney and KEYBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.