Correlation Between KeyCorp and First Community
Can any of the company-specific risk be diversified away by investing in both KeyCorp and First Community 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 First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and First Community, you can compare the effects of market volatilities on KeyCorp and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and First Community.
Diversification Opportunities for KeyCorp and First Community
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of KeyCorp i.e., KeyCorp and First Community go up and down completely randomly.
Pair Corralation between KeyCorp and First Community
Assuming the 90 days trading horizon KeyCorp is expected to generate 24.18 times less return on investment than First Community. But when comparing it to its historical volatility, KeyCorp is 1.77 times less risky than First Community. It trades about 0.02 of its potential returns per unit of risk. First Community is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,335 in First Community on August 31, 2024 and sell it today you would earn a total of 233.00 from holding First Community or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. First Community
Performance |
| Timeline |
| KeyCorp |
| First Community |
KeyCorp and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and First Community
The main advantage of trading using opposite KeyCorp and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third Bancorp |
| First Community vs. KeyCorp | First Community vs. Comerica | First Community vs. First Horizon National | First Community vs. Western Alliance Bancorporation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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