Correlation Between KeyCorp and Bank Central

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

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

Diversification Opportunities for KeyCorp and Bank Central

-0.26

Correlation Coefficient

KeyCorp  Bank Central

Very good diversification

The 3 months correlation between KeyCorp and Bank is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of KeyCorp i.e., KeyCorp and Bank Central go up and down completely randomly.

Pair Corralation between KeyCorp and Bank Central

Considering the 90-day investment horizon KeyCorp is expected to generate 2.46 times more return on investment than Bank Central. However, KeyCorp is 2.46 times more volatile than Bank Central Asia. It trades about 0.11 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.18 per unit of risk. If you would invest  1,770  in KeyCorp on August 17, 2024 and sell it today you would earn a total of  144.00  from holding KeyCorp or generate 8.14% return on investment over 90 days.

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

KeyCorp  vs.  Bank Central Asia

KeyCorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, KeyCorp showed solid returns over the last few months and may actually be approaching a breakup point.

Bank Central Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bank Central is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and Bank Central

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

The idea behind KeyCorp and Bank Central Asia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.