Correlation Between KeyCorp and Community Bank

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

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

Diversification Opportunities for KeyCorp and Community Bank

0.32

Correlation Coefficient

KeyCorp  Community Bank

Weak diversification

The 3 months correlation between KeyCorp and Community is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Community Bank System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank System 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 Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank System has no effect on the direction of KeyCorp i.e., KeyCorp and Community Bank go up and down completely randomly.

Pair Corralation between KeyCorp and Community Bank

Assuming the 90 days trading horizon KeyCorp is expected to generate 2.8 times less return on investment than Community Bank. But when comparing it to its historical volatility, KeyCorp is 3.09 times less risky than Community Bank. It trades about 0.01 of its potential returns per unit of risk. Community Bank System is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,415  in Community Bank System on April 30, 2025 and sell it today you would lose (15.00) from holding Community Bank System or give up 0.28% of portfolio value over 90 days.

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

KeyCorp  vs.  Community Bank System

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Community Bank System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community Bank System has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Community Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KeyCorp and Community Bank

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

The idea behind KeyCorp and Community Bank System 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.