Correlation Between Zions Bancorporation and KeyCorp

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

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

Diversification Opportunities for Zions Bancorporation and KeyCorp

0.96

Correlation Coefficient

Zions Bancorporation  KeyCorp

Almost no diversification

The 3 months correlation between Zions and KeyCorp is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Zions Bancorporation 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 Zions Bancorporation 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 Zions Bancorporation i.e., Zions Bancorporation and KeyCorp go up and down completely randomly.

Pair Corralation between Zions Bancorporation and KeyCorp

Given the investment horizon of 90 days Zions Bancorporation is expected to under-perform the KeyCorp. In addition to that, Zions Bancorporation is 1.01 times more volatile than KeyCorp. It trades about -0.07 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.05 per unit of volatility. If you would invest  1,690  in KeyCorp on December 29, 2024 and sell it today you would lose (110.00) from holding KeyCorp or give up 6.51% of portfolio value over 90 days.

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

Zions Bancorp.  vs.  KeyCorp

Zions Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zions Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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. In spite of fairly strong technical and fundamental indicators, KeyCorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zions Bancorporation and KeyCorp

The main advantage of trading using opposite Zions Bancorporation and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation 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 Zions Bancorporation 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.