Correlation Between KeyCorp and Nokia

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

By analyzing existing cross correlation between KeyCorp and Nokia 6625 percent, you can compare the effects of market volatilities on KeyCorp and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Nokia.

Diversification Opportunities for KeyCorp and Nokia

0.2

Correlation Coefficient

KeyCorp  Nokia

Modest diversification

The 3 months correlation between KeyCorp and Nokia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Nokia 6625 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 6625 percent 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia 6625 percent has no effect on the direction of KeyCorp i.e., KeyCorp and Nokia go up and down completely randomly.

Pair Corralation between KeyCorp and Nokia

Assuming the 90 days trading horizon KeyCorp is expected to generate 1.45 times more return on investment than Nokia. However, KeyCorp is 1.45 times more volatile than Nokia 6625 percent. It trades about 0.04 of its potential returns per unit of risk. Nokia 6625 percent is currently generating about 0.01 per unit of risk. If you would invest  2,489  in KeyCorp on December 2, 2024 and sell it today you would earn a total of  39.00  from holding KeyCorp or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

KeyCorp  vs.  Nokia 6625 percent

KeyCorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 2 (%) 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.

Nokia 6625 percent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokia 6625 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nokia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and Nokia

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

The idea behind KeyCorp and Nokia 6625 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.