Correlation Between KeyCorp and CVR Partners
Can any of the company-specific risk be diversified away by investing in both KeyCorp and CVR Partners 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 CVR Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and CVR Partners LP, you can compare the effects of market volatilities on KeyCorp and CVR Partners 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 CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and CVR Partners.
Diversification Opportunities for KeyCorp and CVR Partners
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KeyCorp and CVR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of KeyCorp i.e., KeyCorp and CVR Partners go up and down completely randomly.
Pair Corralation between KeyCorp and CVR Partners
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.54 times less return on investment than CVR Partners. But when comparing it to its historical volatility, KeyCorp is 2.04 times less risky than CVR Partners. It trades about 0.07 of its potential returns per unit of risk. CVR Partners LP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,595 in CVR Partners LP on November 5, 2024 and sell it today you would earn a total of 1,555 from holding CVR Partners LP or generate 23.58% 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. CVR Partners LP
Performance |
| Timeline |
| KeyCorp |
| CVR Partners LP |
KeyCorp and CVR Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and CVR Partners
The main advantage of trading using opposite KeyCorp and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, CVR Partners 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 CVR Partners will offset losses from the drop in CVR Partners' long position.The idea behind KeyCorp and CVR Partners LP 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.| CVR Partners vs. CF Industries Holdings | CVR Partners vs. The Mosaic | CVR Partners vs. American Vanguard | CVR Partners vs. ICL Israel Chemicals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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