Correlation Between Metropolitan Bank and KeyCorp

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

By analyzing existing cross correlation between Metropolitan Bank Holding and KeyCorp, you can compare the effects of market volatilities on Metropolitan Bank 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 Metropolitan Bank with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and KeyCorp.

Diversification Opportunities for Metropolitan Bank and KeyCorp

-0.3

Correlation Coefficient

Metropolitan Bank  KeyCorp

Very good diversification

The 3 months correlation between Metropolitan and KeyCorp is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Holding and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Metropolitan Bank 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 Metropolitan Bank Holding 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 has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and KeyCorp go up and down completely randomly.

Pair Corralation between Metropolitan Bank and KeyCorp

Considering the 90-day investment horizon Metropolitan Bank Holding is expected to under-perform the KeyCorp. In addition to that, Metropolitan Bank is 2.61 times more volatile than KeyCorp. It trades about -0.22 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.15 per unit of volatility. If you would invest  2,466  in KeyCorp on September 23, 2024 and sell it today you would lose (73.00) from holding KeyCorp or give up 2.96% of portfolio value over 90 days.

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

Metropolitan Bank Holding  vs.  KeyCorp

Metropolitan Bank Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan Bank Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Metropolitan Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Metropolitan Bank and KeyCorp

The main advantage of trading using opposite Metropolitan Bank and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank 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 Metropolitan Bank Holding and KeyCorp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.