Correlation Between KeyCorp and Freeport

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

By analyzing existing cross correlation between KeyCorp and Freeport McMoRan 54 percent, you can compare the effects of market volatilities on KeyCorp and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Freeport.

Diversification Opportunities for KeyCorp and Freeport

0.34

Correlation Coefficient

KeyCorp  Freeport

Weak diversification

The 3 months correlation between KeyCorp and Freeport is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Freeport McMoRan 54 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of KeyCorp i.e., KeyCorp and Freeport go up and down completely randomly.

Pair Corralation between KeyCorp and Freeport

Assuming the 90 days trading horizon KeyCorp is expected to generate 2.37 times more return on investment than Freeport. However, KeyCorp is 2.37 times more volatile than Freeport McMoRan 54 percent. It trades about 0.08 of its potential returns per unit of risk. Freeport McMoRan 54 percent is currently generating about -0.47 per unit of risk. If you would invest  2,475  in KeyCorp on October 6, 2024 and sell it today you would earn a total of  30.00  from holding KeyCorp or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

KeyCorp  vs.  Freeport McMoRan 54 percent

KeyCorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 5 (%) 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.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 54 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and Freeport

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

The idea behind KeyCorp and Freeport McMoRan 54 percent 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 Transaction History module to view history of all your transactions and understand their impact on performance.