Correlation Between KeyCorp and Capital One
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Capital One 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 Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Capital One Financial, you can compare the effects of market volatilities on KeyCorp and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Capital One.
Diversification Opportunities for KeyCorp and Capital One
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between KeyCorp and Capital is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Capital One go up and down completely randomly.
Pair Corralation between KeyCorp and Capital One
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.87 times more return on investment than Capital One. However, KeyCorp is 1.87 times more volatile than Capital One Financial. It trades about 0.02 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.04 per unit of risk. If you would invest 2,056 in KeyCorp on August 27, 2024 and sell it today you would earn a total of 258.00 from holding KeyCorp or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Capital One Financial
Performance |
| Timeline |
| KeyCorp |
| Capital One Financial |
KeyCorp and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Capital One
The main advantage of trading using opposite KeyCorp and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.The idea behind KeyCorp and Capital One Financial 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.| Capital One vs. Capital One Financial | Capital One vs. Wells Fargo | Capital One vs. Bank of America | Capital One vs. Capital One 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |