Correlation Between KeyCorp and Tectonic Financial

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

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

Diversification Opportunities for KeyCorp and Tectonic Financial

-0.5

Correlation Coefficient

KeyCorp  Tectonic Financial

Very good diversification

The 3 months correlation between KeyCorp and Tectonic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Financial 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Tectonic Financial go up and down completely randomly.

Pair Corralation between KeyCorp and Tectonic Financial

Assuming the 90 days trading horizon KeyCorp is expected to generate 4.47 times more return on investment than Tectonic Financial. However, KeyCorp is 4.47 times more volatile than Tectonic Financial PR. It trades about 0.02 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.05 per unit of risk. If you would invest  2,424  in KeyCorp on October 13, 2024 and sell it today you would earn a total of  8.00  from holding KeyCorp or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

KeyCorp  vs.  Tectonic Financial PR

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.

Tectonic Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with KeyCorp and Tectonic Financial

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

The idea behind KeyCorp and Tectonic Financial PR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.