Correlation Between Fulton Financial and KeyCorp

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

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

Diversification Opportunities for Fulton Financial and KeyCorp

0.01

Correlation Coefficient

Fulton Financial  KeyCorp

Significant diversification

The 3 months correlation between Fulton and KeyCorp is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fulton Financial and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Fulton 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 Fulton 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 Fulton Financial i.e., Fulton Financial and KeyCorp go up and down completely randomly.

Pair Corralation between Fulton Financial and KeyCorp

Assuming the 90 days horizon Fulton Financial is expected to generate 1.26 times more return on investment than KeyCorp. However, Fulton Financial is 1.26 times more volatile than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about 0.01 per unit of risk. If you would invest  2,012  in Fulton Financial on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Fulton Financial or generate 1.14% return on investment over 90 days.

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

Fulton Financial  vs.  KeyCorp

Fulton Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fulton Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Fulton Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fulton Financial and KeyCorp

The main advantage of trading using opposite Fulton Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulton 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 Fulton 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.