Correlation Between KEYCORP and Bt Brands

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

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

Diversification Opportunities for KEYCORP and Bt Brands

0.37

Correlation Coefficient

KEYCORP  Bt Brands

Weak diversification

The 3 months correlation between KEYCORP and BTBD is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KEYCORP MTN and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 MTN are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of KEYCORP i.e., KEYCORP and Bt Brands go up and down completely randomly.

Pair Corralation between KEYCORP and Bt Brands

Assuming the 90 days trading horizon KEYCORP MTN is expected to generate 0.58 times more return on investment than Bt Brands. However, KEYCORP MTN is 1.73 times less risky than Bt Brands. It trades about -0.08 of its potential returns per unit of risk. Bt Brands is currently generating about -0.06 per unit of risk. If you would invest  9,095  in KEYCORP MTN on September 22, 2024 and sell it today you would lose (1,095) from holding KEYCORP MTN or give up 12.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KEYCORP MTN  vs.  Bt Brands

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

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 conflicting 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.

Bt Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with KEYCORP and Bt Brands

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

The idea behind KEYCORP MTN and Bt Brands 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.