Correlation Between KeyCorp and Siriuspoint

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

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

Diversification Opportunities for KeyCorp and Siriuspoint

-0.43

Correlation Coefficient

KeyCorp  Siriuspoint

Very good diversification

The 3 months correlation between KeyCorp and Siriuspoint is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of KeyCorp i.e., KeyCorp and Siriuspoint go up and down completely randomly.

Pair Corralation between KeyCorp and Siriuspoint

Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Siriuspoint. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 2.78 times less risky than Siriuspoint. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Siriuspoint on September 19, 2024 and sell it today you would earn a total of  89.00  from holding Siriuspoint or generate 6.25% return on investment over 90 days.

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

KeyCorp  vs.  Siriuspoint

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.

Siriuspoint

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KeyCorp and Siriuspoint

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

The idea behind KeyCorp and Siriuspoint 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.