Correlation Between KeyCorp and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Rave Restaurant 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 Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Rave Restaurant Group, you can compare the effects of market volatilities on KeyCorp and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Rave Restaurant.
Diversification Opportunities for KeyCorp and Rave Restaurant
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KeyCorp and Rave is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of KeyCorp i.e., KeyCorp and Rave Restaurant go up and down completely randomly.
Pair Corralation between KeyCorp and Rave Restaurant
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.34 times more return on investment than Rave Restaurant. However, KeyCorp is 2.95 times less risky than Rave Restaurant. It trades about -0.19 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about -0.08 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. Rave Restaurant Group
Performance |
Timeline |
KeyCorp |
Rave Restaurant Group |
KeyCorp and Rave Restaurant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KeyCorp and Rave Restaurant
The main advantage of trading using opposite KeyCorp and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant'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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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