Correlation Between KeyCorp and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Northeast 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 Northeast Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Northeast Bancorp, you can compare the effects of market volatilities on KeyCorp and Northeast 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Northeast Bancorp.
Diversification Opportunities for KeyCorp and Northeast Bancorp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and Northeast is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and Northeast Bancorp go up and down completely randomly.
Pair Corralation between KeyCorp and Northeast Bancorp
Assuming the 90 days trading horizon KeyCorp is expected to generate 3.34 times less return on investment than Northeast Bancorp. In addition to that, KeyCorp is 1.2 times more volatile than Northeast Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Northeast Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 4,062 in Northeast Bancorp on August 25, 2024 and sell it today you would earn a total of 6,078 from holding Northeast Bancorp or generate 149.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Northeast Bancorp
Performance |
| Timeline |
| KeyCorp |
| Northeast Bancorp |
KeyCorp and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Northeast Bancorp
The main advantage of trading using opposite KeyCorp and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Northeast 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third Bancorp |
| Northeast Bancorp vs. Fifth Third Bancorp | Northeast Bancorp vs. Zions Bancorporation | Northeast Bancorp vs. Huntington Bancshares Incorporated | Northeast 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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