Correlation Between First Capital and KeyCorp
Can any of the company-specific risk be diversified away by investing in both First Capital 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 First Capital and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and KeyCorp, you can compare the effects of market volatilities on First Capital 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 First Capital with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and KeyCorp.
Diversification Opportunities for First Capital and KeyCorp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and KeyCorp is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and First Capital 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 First Capital 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 First Capital i.e., First Capital and KeyCorp go up and down completely randomly.
Pair Corralation between First Capital and KeyCorp
Given the investment horizon of 90 days First Capital is expected to generate 2.44 times less return on investment than KeyCorp. But when comparing it to its historical volatility, First Capital is 1.01 times less risky than KeyCorp. It trades about 0.05 of its potential returns per unit of risk. KeyCorp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,370 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 578.00 from holding KeyCorp or generate 42.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
First Capital vs. KeyCorp
Performance |
| Timeline |
| First Capital |
| KeyCorp |
First Capital and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and KeyCorp
The main advantage of trading using opposite First Capital and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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.| First Capital vs. Affinity Bancshares | First Capital vs. Auburn National Bancorporation | First Capital vs. BayCom Corp | First Capital vs. First Community |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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