Correlation Between KeyCorp and FS Bancorp

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

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

Diversification Opportunities for KeyCorp and FS Bancorp

0.49

Correlation Coefficient

KeyCorp  FS Bancorp

Very weak diversification

The 3 months correlation between KeyCorp and FSBW is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and FS Bancorp go up and down completely randomly.

Pair Corralation between KeyCorp and FS Bancorp

Assuming the 90 days trading horizon KeyCorp is expected to generate 2.85 times less return on investment than FS Bancorp. But when comparing it to its historical volatility, KeyCorp is 3.53 times less risky than FS Bancorp. It trades about 0.06 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,887  in FS Bancorp on May 21, 2025 and sell it today you would earn a total of  160.00  from holding FS Bancorp or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

KeyCorp  vs.  FS Bancorp

KeyCorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 4 (%) 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.

FS Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental drivers, FS Bancorp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with KeyCorp and FS Bancorp

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

The idea behind KeyCorp and FS Bancorp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.