Correlation Between KeyCorp and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Heartland Financial 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 Heartland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Heartland Financial USA, you can compare the effects of market volatilities on KeyCorp and Heartland Financial 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Heartland Financial.
Diversification Opportunities for KeyCorp and Heartland Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and Heartland is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of KeyCorp i.e., KeyCorp and Heartland Financial go up and down completely randomly.
Pair Corralation between KeyCorp and Heartland Financial
Assuming the 90 days trading horizon KeyCorp is expected to generate 2.13 times more return on investment than Heartland Financial. However, KeyCorp is 2.13 times more volatile than Heartland Financial USA. It trades about 0.12 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.04 per unit of risk. If you would invest 2,240 in KeyCorp on August 28, 2024 and sell it today you would earn a total of 148.00 from holding KeyCorp or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Heartland Financial USA
Performance |
| Timeline |
| KeyCorp |
| Heartland Financial USA |
KeyCorp and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Heartland Financial
The main advantage of trading using opposite KeyCorp and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third Bancorp |
| Heartland Financial vs. Capital One Financial | Heartland Financial vs. Capital One Financial | Heartland Financial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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