Correlation Between KeyCorp and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Eagle Bancorp 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 Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Eagle Bancorp, you can compare the effects of market volatilities on KeyCorp and Eagle Bancorp 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Eagle Bancorp.
Diversification Opportunities for KeyCorp and Eagle Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and Eagle is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and Eagle Bancorp go up and down completely randomly.
Pair Corralation between KeyCorp and Eagle Bancorp
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.76 times more return on investment than Eagle Bancorp. However, KeyCorp is 1.32 times less risky than Eagle Bancorp. It trades about 0.02 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.0 per unit of risk. If you would invest 2,068 in KeyCorp on August 24, 2024 and sell it today you would earn a total of 251.00 from holding KeyCorp or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Eagle Bancorp
Performance |
| Timeline |
| KeyCorp |
| Eagle Bancorp |
KeyCorp and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Eagle Bancorp
The main advantage of trading using opposite KeyCorp and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Eagle Bancorp 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 Eagle Bancorp will offset losses from the drop in Eagle Bancorp's long position.The idea behind KeyCorp and Eagle Bancorp 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.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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