Correlation Between First CommunityPFD and KeyCorp

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

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

Diversification Opportunities for First CommunityPFD and KeyCorp

0.6

Correlation Coefficient

First CommunityPFD  KeyCorp

Poor diversification

The 3 months correlation between First and KeyCorp is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Community and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and First CommunityPFD 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 First Community 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 First CommunityPFD i.e., First CommunityPFD and KeyCorp go up and down completely randomly.

Pair Corralation between First CommunityPFD and KeyCorp

Assuming the 90 days horizon First Community is expected to generate 1.65 times more return on investment than KeyCorp. However, First CommunityPFD is 1.65 times more volatile than KeyCorp. It trades about 0.11 of its potential returns per unit of risk. KeyCorp is currently generating about 0.08 per unit of risk. If you would invest  1,200  in First Community on April 25, 2025 and sell it today you would earn a total of  67.00  from holding First Community or generate 5.58% return on investment over 90 days.

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

First Community  vs.  KeyCorp

First CommunityPFD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, First CommunityPFD 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First CommunityPFD and KeyCorp

The main advantage of trading using opposite First CommunityPFD and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First CommunityPFD 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 First Community 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.