Correlation Between KeyCorp and Investar Holding

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

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

Diversification Opportunities for KeyCorp and Investar Holding

-0.32

Correlation Coefficient

KeyCorp  Investar Holding

Very good diversification

The 3 months correlation between KeyCorp and Investar is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of KeyCorp i.e., KeyCorp and Investar Holding go up and down completely randomly.

Pair Corralation between KeyCorp and Investar Holding

Assuming the 90 days trading horizon KeyCorp is expected to generate 0.61 times more return on investment than Investar Holding. However, KeyCorp is 1.64 times less risky than Investar Holding. It trades about -0.14 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.13 per unit of risk. If you would invest  2,463  in KeyCorp on September 22, 2024 and sell it today you would lose (70.00) from holding KeyCorp or give up 2.84% of portfolio value over 90 days.

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

KeyCorp  vs.  Investar Holding Corp

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

Investar Holding Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investar Holding Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Investar Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KeyCorp and Investar Holding

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

The idea behind KeyCorp and Investar Holding Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.