Correlation Between KEYBANK and Procter Gamble

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

By analyzing existing cross correlation between KEYBANK NATL ASSN and Procter Gamble, you can compare the effects of market volatilities on KEYBANK and Procter Gamble 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 KEYBANK with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYBANK and Procter Gamble.

Diversification Opportunities for KEYBANK and Procter Gamble

0.12

Correlation Coefficient

KEYBANK  Procter Gamble

Average diversification

The 3 months correlation between KEYBANK and Procter is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding KEYBANK NATL ASSN and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and KEYBANK 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 KEYBANK NATL ASSN are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of KEYBANK i.e., KEYBANK and Procter Gamble go up and down completely randomly.

Pair Corralation between KEYBANK and Procter Gamble

Assuming the 90 days trading horizon KEYBANK NATL ASSN is expected to under-perform the Procter Gamble. But the bond apears to be less risky and, when comparing its historical volatility, KEYBANK NATL ASSN is 1.1 times less risky than Procter Gamble. The bond trades about -0.12 of its potential returns per unit of risk. The Procter Gamble is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16,488  in Procter Gamble on September 23, 2024 and sell it today you would earn a total of  318.00  from holding Procter Gamble or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.54%
Values	Daily Returns

KEYBANK NATL ASSN  vs.  Procter Gamble

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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 KEYBANK NATL ASSN investors.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KEYBANK and Procter Gamble

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

The idea behind KEYBANK NATL ASSN and Procter Gamble 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..