Correlation Between KEYCORP and Equinix

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

By analyzing existing cross correlation between KEYCORP MEDIUM TERM and Equinix, you can compare the effects of market volatilities on KEYCORP and Equinix 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 Equinix. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYCORP and Equinix.

Diversification Opportunities for KEYCORP and Equinix

-0.34

Correlation Coefficient

KEYCORP  Equinix

Very good diversification

The 3 months correlation between KEYCORP and Equinix is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KEYCORP MEDIUM TERM and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 MEDIUM TERM are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of KEYCORP i.e., KEYCORP and Equinix go up and down completely randomly.

Pair Corralation between KEYCORP and Equinix

Assuming the 90 days trading horizon KEYCORP MEDIUM TERM is expected to under-perform the Equinix. But the bond apears to be less risky and, when comparing its historical volatility, KEYCORP MEDIUM TERM is 1.47 times less risky than Equinix. The bond trades about -0.17 of its potential returns per unit of risk. The Equinix is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  91,894  in Equinix on September 21, 2024 and sell it today you would earn a total of  828.00  from holding Equinix or generate 0.9% return on investment over 90 days.

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

KEYCORP MEDIUM TERM  vs.  Equinix

KEYCORP MEDIUM TERM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MEDIUM TERM 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 MEDIUM TERM investors.

Equinix

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Equinix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KEYCORP and Equinix

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

The idea behind KEYCORP MEDIUM TERM and Equinix 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.