Correlation Between KeyCorp and KeyCorp

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

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

Diversification Opportunities for KeyCorp and KeyCorp

0.57

Correlation Coefficient

KeyCorp  KeyCorp

Very weak diversification

The 3 months correlation between KeyCorp and KeyCorp is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 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 KeyCorp i.e., KeyCorp and KeyCorp go up and down completely randomly.

Pair Corralation between KeyCorp and KeyCorp

Assuming the 90 days trading horizon KeyCorp is expected to generate 2.64 times less return on investment than KeyCorp. But when comparing it to its historical volatility, KeyCorp is 1.14 times less risky than KeyCorp. It trades about 0.06 of its potential returns per unit of risk. KeyCorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,200  in KeyCorp on August 31, 2024 and sell it today you would earn a total of  172.00  from holding KeyCorp or generate 7.82% return on investment over 90 days.

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

KeyCorp  vs.  KeyCorp

KeyCorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

KeyCorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with KeyCorp and KeyCorp

The main advantage of trading using opposite KeyCorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp 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 KeyCorp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.