Correlation Between KeyCorp and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Empresa Distribuidora 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 Empresa Distribuidora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Empresa Distribuidora y, you can compare the effects of market volatilities on KeyCorp and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Empresa Distribuidora.
Diversification Opportunities for KeyCorp and Empresa Distribuidora
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KeyCorp and Empresa is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of KeyCorp i.e., KeyCorp and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between KeyCorp and Empresa Distribuidora
Assuming the 90 days trading horizon KeyCorp is expected to generate 5.27 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, KeyCorp is 2.92 times less risky than Empresa Distribuidora. It trades about 0.05 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,637 in Empresa Distribuidora y on September 12, 2024 and sell it today you would earn a total of 2,940 from holding Empresa Distribuidora y or generate 179.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Empresa Distribuidora y
Performance |
| Timeline |
| KeyCorp |
| Empresa Distribuidora |
KeyCorp and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Empresa Distribuidora
The main advantage of trading using opposite KeyCorp and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Empresa Distribuidora 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 Empresa Distribuidora will offset losses from the drop in Empresa Distribuidora's long position.The idea behind KeyCorp and Empresa Distribuidora y 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.| Empresa Distribuidora vs. Southern Company | Empresa Distribuidora vs. Consolidated Edison | Empresa Distribuidora vs. Edison International |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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