Correlation Between KeyCorp and Bank of Hawaii

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

Diversification Opportunities for KeyCorp and Bank of Hawaii

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between KeyCorp and Bank is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii 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 Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of KeyCorp i.e., KeyCorp and Bank of Hawaii go up and down completely randomly.

Pair Corralation between KeyCorp and Bank of Hawaii

Assuming the 90 days trading horizon KeyCorp is expected to generate 0.78 times more return on investment than Bank of Hawaii. However, KeyCorp is 1.28 times less risky than Bank of Hawaii. It trades about 0.15 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.07 per unit of risk. If you would invest  2,052  in KeyCorp on September 3, 2024 and sell it today you would earn a total of  352.00  from holding KeyCorp or generate 17.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KeyCorp  vs.  Bank of Hawaii

 Performance 
       Timeline  
KeyCorp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Bank of Hawaii 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank of Hawaii has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Bank of Hawaii is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KeyCorp and Bank of Hawaii Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KeyCorp and Bank of Hawaii

The main advantage of trading using opposite KeyCorp and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Bank of Hawaii 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 Bank of Hawaii will offset losses from the drop in Bank of Hawaii's long position.
The idea behind KeyCorp and Bank of Hawaii 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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