Correlation Between KeyCorp and Old National
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Old National 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 Old National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Old National Bancorp, you can compare the effects of market volatilities on KeyCorp and Old National 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 Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Old National.
Diversification Opportunities for KeyCorp and Old National
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KeyCorp and Old is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National 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 Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and Old National go up and down completely randomly.
Pair Corralation between KeyCorp and Old National
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.34 times more return on investment than Old National. However, KeyCorp is 1.34 times more volatile than Old National Bancorp. It trades about 0.1 of its potential returns per unit of risk. Old National Bancorp is currently generating about 0.01 per unit of risk. If you would invest 2,290 in KeyCorp on August 28, 2024 and sell it today you would earn a total of 43.00 from holding KeyCorp or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Old National Bancorp
Performance |
| Timeline |
| KeyCorp |
| Old National Bancorp |
KeyCorp and Old National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Old National
The main advantage of trading using opposite KeyCorp and Old National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Old National 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 Old National will offset losses from the drop in Old National's long position.The idea behind KeyCorp and Old National 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.| Old National vs. Capital One Financial | Old National vs. Capital One Financial | Old National vs. Bank of America |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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