Correlation Between Eastern Bankshares and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Eastern Bankshares 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 Eastern Bankshares and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Bankshares and KeyCorp, you can compare the effects of market volatilities on Eastern Bankshares 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 Eastern Bankshares with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Bankshares and KeyCorp.
Diversification Opportunities for Eastern Bankshares and KeyCorp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and KeyCorp is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Bankshares and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Eastern Bankshares 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 Eastern Bankshares 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 Eastern Bankshares i.e., Eastern Bankshares and KeyCorp go up and down completely randomly.
Pair Corralation between Eastern Bankshares and KeyCorp
Considering the 90-day investment horizon Eastern Bankshares is expected to generate 0.87 times more return on investment than KeyCorp. However, Eastern Bankshares is 1.15 times less risky than KeyCorp. It trades about 0.18 of its potential returns per unit of risk. KeyCorp is currently generating about 0.15 per unit of risk. If you would invest 1,663 in Eastern Bankshares on August 31, 2024 and sell it today you would earn a total of 205.00 from holding Eastern Bankshares or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Bankshares vs. KeyCorp
Performance |
| Timeline |
| Eastern Bankshares |
| KeyCorp |
Eastern Bankshares and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Bankshares and KeyCorp
The main advantage of trading using opposite Eastern Bankshares and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Bankshares 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.| Eastern Bankshares vs. KeyCorp | Eastern Bankshares vs. Comerica | Eastern Bankshares vs. First Horizon National | Eastern Bankshares vs. Western Alliance Bancorporation |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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