Correlation Between Credicorp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Credicorp 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 Credicorp and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credicorp and KeyCorp, you can compare the effects of market volatilities on Credicorp 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 Credicorp with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credicorp and KeyCorp.
Diversification Opportunities for Credicorp and KeyCorp
Poor diversification
The 3 months correlation between Credicorp and KeyCorp is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Credicorp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Credicorp 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 Credicorp 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 Credicorp i.e., Credicorp and KeyCorp go up and down completely randomly.
Pair Corralation between Credicorp and KeyCorp
Considering the 90-day investment horizon Credicorp is expected to generate 1.14 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Credicorp is 1.79 times less risky than KeyCorp. It trades about 0.05 of its potential returns per unit of risk. KeyCorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,575 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 373.00 from holding KeyCorp or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credicorp vs. KeyCorp
Performance |
| Timeline |
| Credicorp |
| KeyCorp |
Credicorp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credicorp and KeyCorp
The main advantage of trading using opposite Credicorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credicorp 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.| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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