Correlation Between KeyCorp and First Niles

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

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

Diversification Opportunities for KeyCorp and First Niles

-0.03

Correlation Coefficient

KeyCorp  First Niles

Good diversification

The 3 months correlation between KeyCorp and First is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Niles Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Niles 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 First Niles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Niles Financial has no effect on the direction of KeyCorp i.e., KeyCorp and First Niles go up and down completely randomly.

Pair Corralation between KeyCorp and First Niles

Considering the 90-day investment horizon KeyCorp is expected to generate 5.46 times more return on investment than First Niles. However, KeyCorp is 5.46 times more volatile than First Niles Financial. It trades about 0.02 of its potential returns per unit of risk. First Niles Financial is currently generating about -0.22 per unit of risk. If you would invest  1,562  in KeyCorp on September 21, 2024 and sell it today you would earn a total of  119.00  from holding KeyCorp or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.25%
Values	Daily Returns

KeyCorp  vs.  First Niles Financial

KeyCorp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Niles Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Niles Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, First Niles is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KeyCorp and First Niles

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

The idea behind KeyCorp and First Niles Financial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.