Correlation Between BBVA Banco and KeyCorp

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Can any of the company-specific risk be diversified away by investing in both BBVA Banco 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 BBVA Banco and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and KeyCorp, you can compare the effects of market volatilities on BBVA Banco 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 BBVA Banco with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and KeyCorp.

Diversification Opportunities for BBVA Banco and KeyCorp

BBVAKeyCorpDiversified AwayBBVAKeyCorpDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BBVA and KeyCorp is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and BBVA Banco 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 BBVA Banco Frances 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 BBVA Banco i.e., BBVA Banco and KeyCorp go up and down completely randomly.

Pair Corralation between BBVA Banco and KeyCorp

Given the investment horizon of 90 days BBVA Banco Frances is expected to under-perform the KeyCorp. In addition to that, BBVA Banco is 5.27 times more volatile than KeyCorp. It trades about -0.32 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.0 per unit of volatility. If you would invest  2,513  in KeyCorp on November 30, 2024 and sell it today you would lose (1.00) from holding KeyCorp or give up 0.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BBVA Banco Frances  vs.  KeyCorp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0102030
JavaScript chart by amCharts 3.21.15BBAR KEY-PI
       Timeline  
BBVA Banco Frances 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BBVA Banco Frances are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BBVA Banco may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb16171819202122232425
KeyCorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.52424.52525.5

BBVA Banco and KeyCorp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.96-10.46-6.95-3.450.043.447.010.5614.1217.68 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15BBAR KEY-PI
       Returns  

Pair Trading with BBVA Banco and KeyCorp

The main advantage of trading using opposite BBVA Banco and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco 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 BBVA Banco Frances 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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