Correlation Between KeyCorp and State Street
Can any of the company-specific risk be diversified away by investing in both KeyCorp and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and State Street, you can compare the effects of market volatilities on KeyCorp and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and State Street.
Diversification Opportunities for KeyCorp and State Street
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KeyCorp and State is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of KeyCorp i.e., KeyCorp and State Street go up and down completely randomly.
Pair Corralation between KeyCorp and State Street
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.23 times more return on investment than State Street. However, KeyCorp is 1.23 times more volatile than State Street. It trades about 0.06 of its potential returns per unit of risk. State Street is currently generating about 0.06 per unit of risk. If you would invest 2,545 in KeyCorp on September 1, 2024 and sell it today you would earn a total of 21.00 from holding KeyCorp or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. State Street
Performance |
| Timeline |
| KeyCorp |
| State Street |
KeyCorp and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and State Street
The main advantage of trading using opposite KeyCorp and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.The idea behind KeyCorp and State Street 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.| State Street vs. The Gabelli Equity | State Street vs. The Gabelli Multimedia | State Street vs. The Gabelli Equity | State Street vs. Virtus AllianzGI Convertible |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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