Correlation Between KeyCorp and Northern Trust

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

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

Diversification Opportunities for KeyCorp and Northern Trust

0.92

Correlation Coefficient

KeyCorp  Northern Trust

Almost no diversification

The 3 months correlation between KeyCorp and Northern is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of KeyCorp i.e., KeyCorp and Northern Trust go up and down completely randomly.

Pair Corralation between KeyCorp and Northern Trust

Considering the 90-day investment horizon KeyCorp is expected to generate 2.31 times less return on investment than Northern Trust. But when comparing it to its historical volatility, KeyCorp is 1.32 times less risky than Northern Trust. It trades about 0.09 of its potential returns per unit of risk. Northern Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,491  in Northern Trust on May 10, 2025 and sell it today you would earn a total of  1,982  from holding Northern Trust or generate 18.89% return on investment over 90 days.

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

KeyCorp  vs.  Northern Trust

KeyCorp

Risk-Adjusted Performance

Good

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. In spite of fairly unfluctuating technical and fundamental indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Northern Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Northern Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KeyCorp and Northern Trust

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

The idea behind KeyCorp and Northern Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.