Correlation Between 235825AJ5 and KeyCorp

Can any of the company-specific risk be diversified away by investing in both 235825AJ5 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 235825AJ5 and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US235825AJ53 and KeyCorp, you can compare the effects of market volatilities on 235825AJ5 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 235825AJ5 with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 235825AJ5 and KeyCorp.

Diversification Opportunities for 235825AJ5 and KeyCorp

0.21

Correlation Coefficient

235825AJ5  KeyCorp

Modest diversification

The 3 months correlation between 235825AJ5 and KeyCorp is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding US235825AJ53 and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and 235825AJ5 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 US235825AJ53 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 235825AJ5 i.e., 235825AJ5 and KeyCorp go up and down completely randomly.

Pair Corralation between 235825AJ5 and KeyCorp

Assuming the 90 days trading horizon US235825AJ53 is expected to under-perform the KeyCorp. In addition to that, 235825AJ5 is 1.74 times more volatile than KeyCorp. It trades about -0.08 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.14 per unit of volatility. If you would invest  2,368  in KeyCorp on December 26, 2024 and sell it today you would earn a total of  141.00  from holding KeyCorp or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

US235825AJ53  vs.  KeyCorp

US235825AJ53

Risk-Adjusted Performance

Very Weak

Over the last 90 days US235825AJ53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 235825AJ5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KeyCorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with 235825AJ5 and KeyCorp

The main advantage of trading using opposite 235825AJ5 and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 235825AJ5 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 US235825AJ53 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.