Correlation Between Citigroup and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and KeyCorp, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and KeyCorp.
Diversification Opportunities for Citigroup and KeyCorp
Very good diversification
The 3 months correlation between Citigroup and KeyCorp is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and KeyCorp go up and down completely randomly.
Pair Corralation between Citigroup and KeyCorp
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.29 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Citigroup is 2.8 times less risky than KeyCorp. It trades about 0.07 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 9,889 in KeyCorp on August 24, 2024 and sell it today you would earn a total of 1,361 from holding KeyCorp or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.16% |
| Values | Daily Returns |
Citigroup vs. KeyCorp
Performance |
| Timeline |
| Citigroup |
| KeyCorp |
Citigroup and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and KeyCorp
The main advantage of trading using opposite Citigroup and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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