Correlation Between KeyCorp and First Financial
Can any of the company-specific risk be diversified away by investing in both KeyCorp and First 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 First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and First Financial Northwest, you can compare the effects of market volatilities on KeyCorp and First 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and First Financial.
Diversification Opportunities for KeyCorp and First Financial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KeyCorp and First is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Financial Northwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Northwest 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Northwest has no effect on the direction of KeyCorp i.e., KeyCorp and First Financial go up and down completely randomly.
Pair Corralation between KeyCorp and First Financial
Assuming the 90 days trading horizon KeyCorp is expected to generate 2.47 times less return on investment than First Financial. But when comparing it to its historical volatility, KeyCorp is 1.31 times less risky than First Financial. It trades about 0.02 of its potential returns per unit of risk. First Financial Northwest is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,415 in First Financial Northwest on August 27, 2024 and sell it today you would earn a total of 856.00 from holding First Financial Northwest or generate 60.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. First Financial Northwest
Performance |
| Timeline |
| KeyCorp |
| First Financial Northwest |
KeyCorp and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and First Financial
The main advantage of trading using opposite KeyCorp and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, First 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 First Financial will offset losses from the drop in First Financial's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Associated Banc Corp | KeyCorp vs. New York Community | KeyCorp vs. Synovus Financial Corp |
| First Financial vs. Home Federal Bancorp | First Financial vs. First Northwest Bancorp | First Financial vs. First Capital | First Financial vs. Community West Bancshares |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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