Correlation Between Elfun Trusts and KEYCORP

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

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

Diversification Opportunities for Elfun Trusts and KEYCORP

-0.37

Correlation Coefficient

Elfun Trusts  KEYCORP

Very good diversification

The 3 months correlation between Elfun and KEYCORP is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Trusts Elfun and KEYCORP MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MTN and Elfun Trusts 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 Elfun Trusts Elfun 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 Elfun Trusts i.e., Elfun Trusts and KEYCORP go up and down completely randomly.

Pair Corralation between Elfun Trusts and KEYCORP

Assuming the 90 days horizon Elfun Trusts Elfun is expected to generate 0.23 times more return on investment than KEYCORP. However, Elfun Trusts Elfun is 4.34 times less risky than KEYCORP. It trades about -0.03 of its potential returns per unit of risk. KEYCORP MTN is currently generating about -0.22 per unit of risk. If you would invest  9,766  in Elfun Trusts Elfun on September 20, 2024 and sell it today you would lose (62.00) from holding Elfun Trusts Elfun or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Elfun Trusts Elfun  vs.  KEYCORP MTN

Elfun Trusts Elfun

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Elfun Trusts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KEYCORP MTN investors.

Pair Trading with Elfun Trusts and KEYCORP

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

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.