Correlation Between KeyCorp and Enterprise Bancorp
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Enterprise 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 Enterprise Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Enterprise Bancorp, you can compare the effects of market volatilities on KeyCorp and Enterprise 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 Enterprise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Enterprise Bancorp.
Diversification Opportunities for KeyCorp and Enterprise Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and Enterprise is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 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 Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and Enterprise Bancorp go up and down completely randomly.
Pair Corralation between KeyCorp and Enterprise Bancorp
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.21 times more return on investment than Enterprise Bancorp. However, KeyCorp is 1.21 times more volatile than Enterprise Bancorp. It trades about 0.03 of its potential returns per unit of risk. Enterprise Bancorp is currently generating about 0.02 per unit of risk. If you would invest 2,034 in KeyCorp on August 27, 2024 and sell it today you would earn a total of 339.00 from holding KeyCorp or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Enterprise Bancorp
Performance |
| Timeline |
| KeyCorp |
| Enterprise Bancorp |
KeyCorp and Enterprise Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Enterprise Bancorp
The main advantage of trading using opposite KeyCorp and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Enterprise 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 Enterprise Bancorp will offset losses from the drop in Enterprise Bancorp's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third Bancorp |
| Enterprise Bancorp vs. Fifth Third Bancorp | Enterprise Bancorp vs. Zions Bancorporation | Enterprise Bancorp vs. Huntington Bancshares Incorporated | Enterprise Bancorp vs. PNC Financial Services |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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