Correlation Between KeyCorp and Fulton Financial

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

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

Diversification Opportunities for KeyCorp and Fulton Financial

0.89

Correlation Coefficient

KeyCorp  Fulton Financial

Very poor diversification

The 3 months correlation between KeyCorp and Fulton is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Fulton Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulton Financial 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 Fulton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulton Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Fulton Financial go up and down completely randomly.

Pair Corralation between KeyCorp and Fulton Financial

Assuming the 90 days trading horizon KeyCorp is expected to generate 0.9 times more return on investment than Fulton Financial. However, KeyCorp is 1.11 times less risky than Fulton Financial. It trades about 0.15 of its potential returns per unit of risk. Fulton Financial is currently generating about 0.09 per unit of risk. If you would invest  2,012  in KeyCorp on August 9, 2024 and sell it today you would earn a total of  387.00  from holding KeyCorp or generate 19.23% return on investment over 90 days.

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

KeyCorp  vs.  Fulton Financial

KeyCorp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, KeyCorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fulton Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fulton Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Fulton Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KeyCorp and Fulton Financial

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

The idea behind KeyCorp and Fulton Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.