Correlation Between KeyCorp and BankFinancial

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

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

Diversification Opportunities for KeyCorp and BankFinancial

0.57

Correlation Coefficient

KeyCorp  BankFinancial

Very weak diversification

The 3 months correlation between KeyCorp and BankFinancial is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial and KeyCorp 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 KeyCorp are associated (or correlated) with BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of KeyCorp i.e., KeyCorp and BankFinancial go up and down completely randomly.

Pair Corralation between KeyCorp and BankFinancial

Assuming the 90 days trading horizon KeyCorp is expected to generate 1.85 times less return on investment than BankFinancial. But when comparing it to its historical volatility, KeyCorp is 4.87 times less risky than BankFinancial. It trades about 0.13 of its potential returns per unit of risk. BankFinancial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,158  in BankFinancial on July 5, 2025 and sell it today you would earn a total of  48.00  from holding BankFinancial or generate 4.15% return on investment over 90 days.

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

KeyCorp  vs.  BankFinancial

KeyCorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 10 (%) 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.

BankFinancial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in BankFinancial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, BankFinancial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and BankFinancial

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

The idea behind KeyCorp and BankFinancial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.