Correlation Between KEYBANK and Weibo Corp

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

Diversification Opportunities for KEYBANK and Weibo Corp

-0.02

Correlation Coefficient

KEYBANK  Weibo Corp

Good diversification

The 3 months correlation between KEYBANK and Weibo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding KEYBANK NATL ASSN and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp 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 Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of KEYBANK i.e., KEYBANK and Weibo Corp go up and down completely randomly.

Pair Corralation between KEYBANK and Weibo Corp

Assuming the 90 days trading horizon KEYBANK NATL ASSN is expected to under-perform the Weibo Corp. But the bond apears to be less risky and, when comparing its historical volatility, KEYBANK NATL ASSN is 3.8 times less risky than Weibo Corp. The bond trades about -0.29 of its potential returns per unit of risk. The Weibo Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  960.00  in Weibo Corp on October 6, 2024 and sell it today you would lose (34.00) from holding Weibo Corp or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

KEYBANK NATL ASSN  vs.  Weibo Corp

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

Weibo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KEYBANK and Weibo Corp

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

The idea behind KEYBANK NATL ASSN and Weibo Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.