Correlation Between KEYCORP and SFL

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

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

Diversification Opportunities for KEYCORP and SFL

0.5

Correlation Coefficient

KEYCORP  SFL

Very weak diversification

The 3 months correlation between KEYCORP and SFL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KEYCORP MTN and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of KEYCORP i.e., KEYCORP and SFL go up and down completely randomly.

Pair Corralation between KEYCORP and SFL

Assuming the 90 days trading horizon KEYCORP MTN is expected to generate 0.77 times more return on investment than SFL. However, KEYCORP MTN is 1.3 times less risky than SFL. It trades about -0.06 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.1 per unit of risk. If you would invest  8,505  in KEYCORP MTN on September 22, 2024 and sell it today you would lose (1,035) from holding KEYCORP MTN or give up 12.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

KEYCORP MTN  vs.  SFL Corp.

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 conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KEYCORP MTN investors.

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with KEYCORP and SFL

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

The idea behind KEYCORP MTN and SFL Corporation 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.