Correlation Between KeyCorp and Banc Of
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Banc Of 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 Banc Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Banc of California,, you can compare the effects of market volatilities on KeyCorp and Banc Of 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 Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Banc Of.
Diversification Opportunities for KeyCorp and Banc Of
Poor diversification
The 3 months correlation between KeyCorp and Banc is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Banc of California, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California, 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 Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California, has no effect on the direction of KeyCorp i.e., KeyCorp and Banc Of go up and down completely randomly.
Pair Corralation between KeyCorp and Banc Of
Assuming the 90 days trading horizon KeyCorp is expected to generate 9.83 times less return on investment than Banc Of. But when comparing it to its historical volatility, KeyCorp is 3.21 times less risky than Banc Of. It trades about 0.06 of its potential returns per unit of risk. Banc of California, is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,584 in Banc of California, on August 28, 2024 and sell it today you would earn a total of 193.00 from holding Banc of California, or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Banc of California,
Performance |
| Timeline |
| KeyCorp |
| Banc of California, |
KeyCorp and Banc Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Banc Of
The main advantage of trading using opposite KeyCorp and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of's long position.The idea behind KeyCorp and Banc of California, 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.| Banc Of vs. Peapack Gladstone Financial | Banc Of vs. Northfield Bancorp | Banc Of vs. Great Southern Bancorp | Banc Of vs. Heritage Financial |
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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