Correlation Between Macys and KEYCORP

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Can any of the company-specific risk be diversified away by investing in both Macys and KEYCORP 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 Macys and KEYCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and KEYCORP MTN, you can compare the effects of market volatilities on Macys and KEYCORP 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 Macys with a short position of KEYCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and KEYCORP.

Diversification Opportunities for Macys and KEYCORP

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Macys and KEYCORP is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and KEYCORP MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MTN and Macys 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 Macys Inc are associated (or correlated) with KEYCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYCORP MTN has no effect on the direction of Macys i.e., Macys and KEYCORP go up and down completely randomly.

Pair Corralation between Macys and KEYCORP

Taking into account the 90-day investment horizon Macys Inc is expected to generate 2.1 times more return on investment than KEYCORP. However, Macys is 2.1 times more volatile than KEYCORP MTN. It trades about 0.0 of its potential returns per unit of risk. KEYCORP MTN is currently generating about 0.0 per unit of risk. If you would invest  1,986  in Macys Inc on September 26, 2024 and sell it today you would lose (304.00) from holding Macys Inc or give up 15.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Macys Inc  vs.  KEYCORP MTN

 Performance 
       Timeline  
Macys Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.
KEYCORP MTN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEYCORP MTN investors.

Macys and KEYCORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Macys and KEYCORP

The main advantage of trading using opposite Macys and KEYCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, KEYCORP 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 KEYCORP will offset losses from the drop in KEYCORP's long position.
The idea behind Macys Inc and KEYCORP MTN 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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