Correlation Between New York and KeyCorp

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

By analyzing existing cross correlation between New York Community and KeyCorp, you can compare the effects of market volatilities on New York and KeyCorp 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 New York with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and KeyCorp.

Diversification Opportunities for New York and KeyCorp

0.77

Correlation Coefficient

New York  KeyCorp

Poor diversification

The 3 months correlation between New and KeyCorp is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding New York Community and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and New York 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 New York Community are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of New York i.e., New York and KeyCorp go up and down completely randomly.

Pair Corralation between New York and KeyCorp

Given the investment horizon of 90 days New York Community is expected to generate 2.01 times more return on investment than KeyCorp. However, New York is 2.01 times more volatile than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about -0.01 per unit of risk. If you would invest  1,114  in New York Community on June 26, 2024 and sell it today you would earn a total of  5.00  from holding New York Community or generate 0.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

New York Community  vs.  KeyCorp

New York Community

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New York Community are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, New York sustained solid returns over the last few months and may actually be approaching a breakup point.

KeyCorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 12 (%) 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.

Pair Trading with New York and KeyCorp

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

The idea behind New York Community and KeyCorp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.