Correlation Between WesBanco and KeyCorp

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

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

Diversification Opportunities for WesBanco and KeyCorp

0.69

Correlation Coefficient

WesBanco  KeyCorp

Poor diversification

The 3 months correlation between WesBanco and KeyCorp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding WesBanco and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and WesBanco 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 WesBanco are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of WesBanco i.e., WesBanco and KeyCorp go up and down completely randomly.

Pair Corralation between WesBanco and KeyCorp

Assuming the 90 days horizon WesBanco is expected to generate 0.4 times more return on investment than KeyCorp. However, WesBanco is 2.51 times less risky than KeyCorp. It trades about 0.1 of its potential returns per unit of risk. KeyCorp is currently generating about 0.01 per unit of risk. If you would invest  2,479  in WesBanco on December 30, 2024 and sell it today you would earn a total of  43.00  from holding WesBanco or generate 1.73% return on investment over 90 days.

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

WesBanco  vs.  KeyCorp

WesBanco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

KeyCorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with WesBanco and KeyCorp

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

The idea behind WesBanco and KeyCorp 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 Stocks Directory module to find actively traded stocks across global markets.