Correlation Between KeyCorp and Brunswick
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Brunswick 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 KeyCorp and Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Brunswick, you can compare the effects of market volatilities on KeyCorp and Brunswick 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 KeyCorp with a short position of Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Brunswick.
Diversification Opportunities for KeyCorp and Brunswick
Very weak diversification
The 3 months correlation between KeyCorp and Brunswick is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and KeyCorp 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 KeyCorp are associated (or correlated) with Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of KeyCorp i.e., KeyCorp and Brunswick go up and down completely randomly.
Pair Corralation between KeyCorp and Brunswick
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.34 times less return on investment than Brunswick. But when comparing it to its historical volatility, KeyCorp is 1.02 times less risky than Brunswick. It trades about 0.02 of its potential returns per unit of risk. Brunswick is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,826 in Brunswick on August 28, 2024 and sell it today you would earn a total of 1,756 from holding Brunswick or generate 25.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Brunswick
Performance |
| Timeline |
| KeyCorp |
| Brunswick |
KeyCorp and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Brunswick
The main advantage of trading using opposite KeyCorp and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.The idea behind KeyCorp and Brunswick pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Brunswick vs. MCBC Holdings | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries | Brunswick vs. Thor Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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