Correlation Between TRAINLINE PLC and KeyCorp
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and KeyCorp, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and KeyCorp.
Diversification Opportunities for TRAINLINE PLC and KeyCorp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TRAINLINE and KeyCorp is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and KeyCorp go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and KeyCorp
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the KeyCorp. In addition to that, TRAINLINE PLC is 1.94 times more volatile than KeyCorp. It trades about -0.27 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.26 per unit of volatility. If you would invest 1,628 in KeyCorp on October 24, 2024 and sell it today you would earn a total of 123.00 from holding KeyCorp or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
TRAINLINE PLC LS vs. KeyCorp
Performance |
| Timeline |
| TRAINLINE PLC LS |
| KeyCorp |
TRAINLINE PLC and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAINLINE PLC and KeyCorp
The main advantage of trading using opposite TRAINLINE PLC and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.| TRAINLINE PLC vs. AEON STORES | TRAINLINE PLC vs. GAMESTOP | TRAINLINE PLC vs. Scientific Games | TRAINLINE PLC vs. GigaMedia |
| KeyCorp vs. TELECOM ITALRISP ADR10 | KeyCorp vs. ONWARD MEDICAL BV | KeyCorp vs. ScanSource | KeyCorp vs. Apollo Medical Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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