Correlation Between KeyCorp and Athene Holding

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

By analyzing existing cross correlation between KeyCorp and Athene Holding, you can compare the effects of market volatilities on KeyCorp and Athene Holding 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 Athene Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Athene Holding.

Diversification Opportunities for KeyCorp and Athene Holding

0.71

Correlation Coefficient

KeyCorp  Athene Holding

Poor diversification

The 3 months correlation between KeyCorp and Athene is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of KeyCorp i.e., KeyCorp and Athene Holding go up and down completely randomly.

Pair Corralation between KeyCorp and Athene Holding

Assuming the 90 days trading horizon KeyCorp is expected to generate 1.16 times less return on investment than Athene Holding. In addition to that, KeyCorp is 1.59 times more volatile than Athene Holding. It trades about 0.02 of its total potential returns per unit of risk. Athene Holding is currently generating about 0.04 per unit of volatility. If you would invest  1,914  in Athene Holding on September 23, 2024 and sell it today you would earn a total of  508.00  from holding Athene Holding or generate 26.54% return on investment over 90 days.

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

KeyCorp  vs.  Athene Holding

KeyCorp

Risk-Adjusted Performance

0 of 100

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Athene Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athene Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Athene Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and Athene Holding

The main advantage of trading using opposite KeyCorp and Athene Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Athene Holding 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 Athene Holding will offset losses from the drop in Athene Holding's long position.

The idea behind KeyCorp and Athene Holding 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.