Correlation Between KEYCORP and Willamette Valley

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

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

Diversification Opportunities for KEYCORP and Willamette Valley

0.34

Correlation Coefficient

KEYCORP  Willamette Valley

Weak diversification

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

Pair Corralation between KEYCORP and Willamette Valley

Assuming the 90 days trading horizon KEYCORP MTN is expected to generate 0.54 times more return on investment than Willamette Valley. However, KEYCORP MTN is 1.87 times less risky than Willamette Valley. It trades about 0.01 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.06 per unit of risk. If you would invest  7,482  in KEYCORP MTN on September 21, 2024 and sell it today you would lose (12.00) from holding KEYCORP MTN or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.66%
Values	Daily Returns

KEYCORP MTN  vs.  Willamette Valley Vineyards

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.

Willamette Valley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willamette Valley Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with KEYCORP and Willamette Valley

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

The idea behind KEYCORP MTN and Willamette Valley Vineyards 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.