Correlation Between KeyCorp and 1st Source
Can any of the company-specific risk be diversified away by investing in both KeyCorp and 1st Source 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 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and 1st Source, you can compare the effects of market volatilities on KeyCorp and 1st Source 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 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and 1st Source.
Diversification Opportunities for KeyCorp and 1st Source
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and 1st is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source 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 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of KeyCorp i.e., KeyCorp and 1st Source go up and down completely randomly.
Pair Corralation between KeyCorp and 1st Source
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.22 times more return on investment than 1st Source. However, KeyCorp is 1.22 times more volatile than 1st Source. It trades about 0.11 of its potential returns per unit of risk. 1st Source is currently generating about -0.09 per unit of risk. If you would invest 2,123 in KeyCorp on October 20, 2024 and sell it today you would earn a total of 73.00 from holding KeyCorp or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. 1st Source
Performance |
| Timeline |
| KeyCorp |
| 1st Source |
KeyCorp and 1st Source Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and 1st Source
The main advantage of trading using opposite KeyCorp and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.The idea behind KeyCorp and 1st Source 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.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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