Correlation Between KeyCorp and First CommunityPFD

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

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

Diversification Opportunities for KeyCorp and First CommunityPFD

0.71

Correlation Coefficient

KeyCorp  First CommunityPFD

Poor diversification

The 3 months correlation between KeyCorp and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First CommunityPFD 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 First CommunityPFD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First CommunityPFD has no effect on the direction of KeyCorp i.e., KeyCorp and First CommunityPFD go up and down completely randomly.

Pair Corralation between KeyCorp and First CommunityPFD

Assuming the 90 days trading horizon KeyCorp is expected to generate 2.54 times less return on investment than First CommunityPFD. But when comparing it to its historical volatility, KeyCorp is 1.8 times less risky than First CommunityPFD. It trades about 0.09 of its potential returns per unit of risk. First Community is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,200  in First Community on May 27, 2025 and sell it today you would earn a total of  85.00  from holding First Community or generate 7.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

KeyCorp  vs.  First Community

KeyCorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 7 (%) 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.

First CommunityPFD

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, First CommunityPFD may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with KeyCorp and First CommunityPFD

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

The idea behind KeyCorp and First Community 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.