Correlation Between GP Investments and KeyCorp
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and KeyCorp, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and KeyCorp.
Diversification Opportunities for GP Investments and KeyCorp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GPIV33 and KeyCorp is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and KeyCorp go up and down completely randomly.
Pair Corralation between GP Investments and KeyCorp
Assuming the 90 days trading horizon GP Investments is expected to under-perform the KeyCorp. But the stock apears to be less risky and, when comparing its historical volatility, GP Investments is 2.68 times less risky than KeyCorp. The stock trades about -0.05 of its potential returns per unit of risk. The KeyCorp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,941 in KeyCorp on September 4, 2024 and sell it today you would earn a total of 2,591 from holding KeyCorp or generate 28.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GP Investments vs. KeyCorp
Performance |
| Timeline |
| GP Investments |
| KeyCorp |
GP Investments and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and KeyCorp
The main advantage of trading using opposite GP Investments and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Bradespar SA | GP Investments vs. Hsi Malls Fundo | GP Investments vs. Fundo Investimento Imobiliario | GP Investments vs. Fras le SA |
| KeyCorp vs. Banco Santander Chile | KeyCorp vs. Lloyds Banking Group | KeyCorp vs. Fundo Investimento Imobiliario | KeyCorp vs. Fras le SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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