Correlation Between Telefonaktiebolaget and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget 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 Telefonaktiebolaget and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and KeyCorp, you can compare the effects of market volatilities on Telefonaktiebolaget 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 Telefonaktiebolaget with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and KeyCorp.
Diversification Opportunities for Telefonaktiebolaget and KeyCorp
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonaktiebolaget and KeyCorp is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson 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 Telefonaktiebolaget i.e., Telefonaktiebolaget and KeyCorp go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and KeyCorp
Assuming the 90 days trading horizon Telefonaktiebolaget is expected to generate 1.28 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Telefonaktiebolaget LM Ericsson is 1.72 times less risky than KeyCorp. It trades about 0.05 of its potential returns per unit of risk. KeyCorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,816 in KeyCorp on August 31, 2024 and sell it today you would earn a total of 2,580 from holding KeyCorp or generate 29.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.1% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. KeyCorp
Performance |
| Timeline |
| Telefonaktiebolaget |
| KeyCorp |
Telefonaktiebolaget and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and KeyCorp
The main advantage of trading using opposite Telefonaktiebolaget and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget 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.| Telefonaktiebolaget vs. Ameriprise Financial | Telefonaktiebolaget vs. HDFC Bank Limited | Telefonaktiebolaget vs. Prudential Financial | Telefonaktiebolaget vs. Costco Wholesale |
| KeyCorp vs. Fras le SA | KeyCorp vs. Western Digital | KeyCorp vs. Energisa SA | KeyCorp vs. Clave Indices De |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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