Correlation Between KeyCorp and Lloyds Banking

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Can any of the company-specific risk be diversified away by investing in both KeyCorp and Lloyds Banking 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 Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Lloyds Banking Group, you can compare the effects of market volatilities on KeyCorp and Lloyds Banking 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 Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Lloyds Banking.

Diversification Opportunities for KeyCorp and Lloyds Banking

KeyCorpLloydsDiversified AwayKeyCorpLloydsDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between KeyCorp and Lloyds is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of KeyCorp i.e., KeyCorp and Lloyds Banking go up and down completely randomly.

Pair Corralation between KeyCorp and Lloyds Banking

Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Lloyds Banking. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 3.02 times less risky than Lloyds Banking. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Lloyds Banking Group is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Lloyds Banking Group on November 30, 2024 and sell it today you would earn a total of  63.00  from holding Lloyds Banking Group or generate 20.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

KeyCorp  vs.  Lloyds Banking Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -5051015
JavaScript chart by amCharts 3.21.15KEY-PI LYG
       Timeline  
KeyCorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.52424.52525.5
Lloyds Banking Group 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lloyds Banking Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Lloyds Banking reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.62.833.23.43.6

KeyCorp and Lloyds Banking Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.68-2.01-1.33-0.660.00.671.352.042.733.42 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15KEY-PI LYG
       Returns  

Pair Trading with KeyCorp and Lloyds Banking

The main advantage of trading using opposite KeyCorp and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.
The idea behind KeyCorp and Lloyds Banking 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.
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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