Correlation Between Washington Federal and KeyCorp

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

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

Diversification Opportunities for Washington Federal and KeyCorp

0.82

Correlation Coefficient

Washington Federal  KeyCorp

Very poor diversification

The 3 months correlation between Washington and KeyCorp is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and KeyCorp go up and down completely randomly.

Pair Corralation between Washington Federal and KeyCorp

Given the investment horizon of 90 days Washington Federal is expected to generate 9.9 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Washington Federal is 1.05 times less risky than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,536  in KeyCorp on May 3, 2025 and sell it today you would earn a total of  256.00  from holding KeyCorp or generate 16.67% return on investment over 90 days.

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

Washington Federal  vs.  KeyCorp

Washington Federal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Washington Federal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Washington Federal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

KeyCorp

Risk-Adjusted Performance

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 unfluctuating technical and fundamental indicators, KeyCorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Washington Federal and KeyCorp

The main advantage of trading using opposite Washington Federal and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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 Washington Federal 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.