Correlation Between KeyCorp and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Arrow Financial 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 KeyCorp and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Arrow Financial, you can compare the effects of market volatilities on KeyCorp and Arrow Financial 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 KeyCorp with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Arrow Financial.
Diversification Opportunities for KeyCorp and Arrow Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between KeyCorp and Arrow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and KeyCorp 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 KeyCorp are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Arrow Financial go up and down completely randomly.
Pair Corralation between KeyCorp and Arrow Financial
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.56 times more return on investment than Arrow Financial. However, KeyCorp is 1.77 times less risky than Arrow Financial. It trades about -0.19 of its potential returns per unit of risk. Arrow Financial is currently generating about -0.44 per unit of risk. If you would invest 2,467 in KeyCorp on September 25, 2024 and sell it today you would lose (92.00) from holding KeyCorp or give up 3.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KeyCorp vs. Arrow Financial
Performance |
Timeline |
KeyCorp |
Arrow Financial |
KeyCorp and Arrow Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KeyCorp and Arrow Financial
The main advantage of trading using opposite KeyCorp and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Arrow Financial 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.KeyCorp vs. Tectonic Financial PR | KeyCorp vs. First Guaranty Bancshares | KeyCorp vs. First Merchants | KeyCorp vs. Metropolitan Bank Holding |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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