Correlation Between KeyCorp and First Mid
Can any of the company-specific risk be diversified away by investing in both KeyCorp and First Mid 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 Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and First Mid Illinois, you can compare the effects of market volatilities on KeyCorp and First Mid 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 Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and First Mid.
Diversification Opportunities for KeyCorp and First Mid
Pay attention - limited upside
The 3 months correlation between KeyCorp and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of KeyCorp i.e., KeyCorp and First Mid go up and down completely randomly.
Pair Corralation between KeyCorp and First Mid
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.01 times less return on investment than First Mid. But when comparing it to its historical volatility, KeyCorp is 2.88 times less risky than First Mid. It trades about 0.03 of its potential returns per unit of risk. First Mid Illinois is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,763 in First Mid Illinois on October 25, 2024 and sell it today you would lose (1.00) from holding First Mid Illinois or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
KeyCorp vs. First Mid Illinois
Performance |
| Timeline |
| KeyCorp |
| First Mid Illinois |
KeyCorp and First Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and First Mid
The main advantage of trading using opposite KeyCorp and First Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, First Mid 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 Mid will offset losses from the drop in First Mid's long position.The idea behind KeyCorp and First Mid Illinois 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.| First Mid vs. Finward Bancorp | First Mid vs. Great Southern Bancorp | First Mid vs. Franklin Financial Services | First Mid 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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