Correlation Between KB Financial and KeyCorp
Can any of the company-specific risk be diversified away by investing in both KB Financial 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 KB Financial and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and KeyCorp, you can compare the effects of market volatilities on KB Financial 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 KB Financial with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and KeyCorp.
Diversification Opportunities for KB Financial and KeyCorp
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KB Financial and KeyCorp is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and KB Financial 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 KB Financial Group 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 KB Financial i.e., KB Financial and KeyCorp go up and down completely randomly.
Pair Corralation between KB Financial and KeyCorp
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 2.57 times more return on investment than KeyCorp. However, KB Financial is 2.57 times more volatile than KeyCorp. It trades about -0.02 of its potential returns per unit of risk. KeyCorp is currently generating about -0.31 per unit of risk. If you would invest 5,495 in KB Financial Group on January 13, 2025 and sell it today you would lose (157.00) from holding KB Financial Group or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. KeyCorp
Performance |
| Timeline |
| KB Financial Group |
| KeyCorp |
KB Financial and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and KeyCorp
The main advantage of trading using opposite KB Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial 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.| KB Financial vs. Shinhan Financial Group | ||
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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