Correlation Between KeyCorp and First Foundation

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

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

Diversification Opportunities for KeyCorp and First Foundation

0.65

Correlation Coefficient

KeyCorp  First Foundation

Poor diversification

The 3 months correlation between KeyCorp and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation 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 Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of KeyCorp i.e., KeyCorp and First Foundation go up and down completely randomly.

Pair Corralation between KeyCorp and First Foundation

Assuming the 90 days trading horizon KeyCorp is expected to generate 1.25 times less return on investment than First Foundation. But when comparing it to its historical volatility, KeyCorp is 4.3 times less risky than First Foundation. It trades about 0.14 of its potential returns per unit of risk. First Foundation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  513.00  in First Foundation on April 23, 2025 and sell it today you would earn a total of  21.00  from holding First Foundation or generate 4.09% return on investment over 90 days.

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

KeyCorp  vs.  First Foundation

KeyCorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

First Foundation

Risk-Adjusted Performance

Insignificant

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

Pair Trading with KeyCorp and First Foundation

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

The idea behind KeyCorp and First Foundation 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.