Correlation Between KeyCorp and First Citizens

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

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

Diversification Opportunities for KeyCorp and First Citizens

0.94

Correlation Coefficient

KeyCorp  First Citizens

Almost no diversification

The 3 months correlation between KeyCorp and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of KeyCorp i.e., KeyCorp and First Citizens go up and down completely randomly.

Pair Corralation between KeyCorp and First Citizens

Considering the 90-day investment horizon KeyCorp is expected to generate 0.96 times more return on investment than First Citizens. However, KeyCorp is 1.05 times less risky than First Citizens. It trades about -0.03 of its potential returns per unit of risk. First Citizens BancShares is currently generating about -0.09 per unit of risk. If you would invest  1,690  in KeyCorp on December 28, 2024 and sell it today you would lose (73.00) from holding KeyCorp or give up 4.32% of portfolio value over 90 days.

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

KeyCorp  vs.  First Citizens BancShares

KeyCorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, KeyCorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Citizens BancShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Citizens BancShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KeyCorp and First Citizens

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

The idea behind KeyCorp and First Citizens BancShares 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.