Correlation Between KeyCorp and Bancolombia
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Bancolombia 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 Bancolombia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Bancolombia SA ADR, you can compare the effects of market volatilities on KeyCorp and Bancolombia 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 Bancolombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Bancolombia.
Diversification Opportunities for KeyCorp and Bancolombia
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KeyCorp and Bancolombia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR 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 Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of KeyCorp i.e., KeyCorp and Bancolombia go up and down completely randomly.
Pair Corralation between KeyCorp and Bancolombia
Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Bancolombia. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 3.46 times less risky than Bancolombia. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Bancolombia SA ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,105 in Bancolombia SA ADR on August 24, 2024 and sell it today you would earn a total of 171.00 from holding Bancolombia SA ADR or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Bancolombia SA ADR
Performance |
| Timeline |
| KeyCorp |
| Bancolombia SA ADR |
KeyCorp and Bancolombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Bancolombia
The main advantage of trading using opposite KeyCorp and Bancolombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Bancolombia 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 Bancolombia will offset losses from the drop in Bancolombia's long position.The idea behind KeyCorp and Bancolombia SA ADR 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.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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