Correlation Between AMCON Distributing and KEYCORP

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

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

Diversification Opportunities for AMCON Distributing and KEYCORP

0.16

Correlation Coefficient

AMCON Distributing  KEYCORP

Average diversification

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

Pair Corralation between AMCON Distributing and KEYCORP

Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.1 times more return on investment than KEYCORP. However, AMCON Distributing is 2.1 times more volatile than KEYCORP MTN. It trades about 0.1 of its potential returns per unit of risk. KEYCORP MTN is currently generating about -0.25 per unit of risk. If you would invest  12,795  in AMCON Distributing on September 25, 2024 and sell it today you would earn a total of  706.00  from holding AMCON Distributing or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

AMCON Distributing  vs.  KEYCORP MTN

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 MTN investors.

Pair Trading with AMCON Distributing and KEYCORP

The main advantage of trading using opposite AMCON Distributing and KEYCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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 AMCON Distributing and KEYCORP MTN 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.