Correlation Between KeyCorp and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Citizens Financial Group, you can compare the effects of market volatilities on KeyCorp and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Citizens Financial.
Diversification Opportunities for KeyCorp and Citizens Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KeyCorp and Citizens is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Citizens Financial go up and down completely randomly.
Pair Corralation between KeyCorp and Citizens Financial
Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Citizens Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 1.82 times less risky than Citizens Financial. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Citizens Financial Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,016 in Citizens Financial Group on November 5, 2024 and sell it today you would earn a total of 24.00 from holding Citizens Financial Group or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Citizens Financial Group
Performance |
| Timeline |
| KeyCorp |
| Citizens Financial |
KeyCorp and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Citizens Financial
The main advantage of trading using opposite KeyCorp and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.The idea behind KeyCorp and Citizens Financial Group 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.| Citizens Financial vs. Fifth Third Bancorp | Citizens Financial vs. Huntington Bancshares Incorporated | Citizens Financial vs. Washington Federal | Citizens Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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