Correlation Between KEYCORP and Lipocine

Can any of the company-specific risk be diversified away by investing in both KEYCORP and Lipocine 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 Lipocine 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 Lipocine, you can compare the effects of market volatilities on KEYCORP and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYCORP and Lipocine.

Diversification Opportunities for KEYCORP and Lipocine

-0.11

Correlation Coefficient

KEYCORP  Lipocine

Good diversification

The 3 months correlation between KEYCORP and Lipocine is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KEYCORP MEDIUM TERM and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of KEYCORP i.e., KEYCORP and Lipocine go up and down completely randomly.

Pair Corralation between KEYCORP and Lipocine

Assuming the 90 days trading horizon KEYCORP MEDIUM TERM is expected to under-perform the Lipocine. But the bond apears to be less risky and, when comparing its historical volatility, KEYCORP MEDIUM TERM is 6.33 times less risky than Lipocine. The bond trades about -0.11 of its potential returns per unit of risk. The Lipocine is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  445.00  in Lipocine on September 28, 2024 and sell it today you would earn a total of  31.00  from holding Lipocine or generate 6.97% 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.  Lipocine

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 somewhat strong basic indicators, KEYCORP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lipocine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Lipocine displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEYCORP and Lipocine

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

The idea behind KEYCORP MEDIUM TERM and Lipocine 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.