Correlation Between KeyCorp and Kearny Financial

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

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

Diversification Opportunities for KeyCorp and Kearny Financial

0.63

Correlation Coefficient

KeyCorp  Kearny Financial

Poor diversification

The 3 months correlation between KeyCorp and Kearny is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp 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 Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of KeyCorp i.e., KeyCorp and Kearny Financial go up and down completely randomly.

Pair Corralation between KeyCorp and Kearny Financial

Assuming the 90 days trading horizon KeyCorp is expected to generate 3.42 times less return on investment than Kearny Financial. But when comparing it to its historical volatility, KeyCorp is 6.12 times less risky than Kearny Financial. It trades about 0.2 of its potential returns per unit of risk. Kearny Financial Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  653.00  in Kearny Financial Corp on September 3, 2024 and sell it today you would earn a total of  139.00  from holding Kearny Financial Corp or generate 21.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KeyCorp  vs.  Kearny Financial Corp

KeyCorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kearny Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kearny Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Kearny Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KeyCorp and Kearny Financial

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

The idea behind KeyCorp and Kearny Financial Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..