Correlation Between KeyCorp and Via Renewables
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Via Renewables 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 Via Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Via Renewables, you can compare the effects of market volatilities on KeyCorp and Via Renewables 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 Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Via Renewables.
Diversification Opportunities for KeyCorp and Via Renewables
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KeyCorp and Via is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of KeyCorp i.e., KeyCorp and Via Renewables go up and down completely randomly.
Pair Corralation between KeyCorp and Via Renewables
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.05 times less return on investment than Via Renewables. But when comparing it to its historical volatility, KeyCorp is 2.48 times less risky than Via Renewables. It trades about 0.07 of its potential returns per unit of risk. Via Renewables is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,123 in Via Renewables on August 29, 2024 and sell it today you would earn a total of 99.00 from holding Via Renewables or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Via Renewables
Performance |
| Timeline |
| KeyCorp |
| Via Renewables |
KeyCorp and Via Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Via Renewables
The main advantage of trading using opposite KeyCorp and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Via Renewables 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 Via Renewables will offset losses from the drop in Via Renewables' long position.The idea behind KeyCorp and Via Renewables 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.| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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