Correlation Between KeyCorp and WesBanco
Can any of the company-specific risk be diversified away by investing in both KeyCorp and WesBanco 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 WesBanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and WesBanco, you can compare the effects of market volatilities on KeyCorp and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and WesBanco.
Diversification Opportunities for KeyCorp and WesBanco
Very poor diversification
The 3 months correlation between KeyCorp and WesBanco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of KeyCorp i.e., KeyCorp and WesBanco go up and down completely randomly.
Pair Corralation between KeyCorp and WesBanco
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.87 times more return on investment than WesBanco. However, KeyCorp is 1.87 times more volatile than WesBanco. It trades about 0.03 of its potential returns per unit of risk. WesBanco is currently generating about 0.03 per unit of risk. If you would invest 2,038 in KeyCorp on August 30, 2024 and sell it today you would earn a total of 334.00 from holding KeyCorp or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. WesBanco
Performance |
| Timeline |
| KeyCorp |
| WesBanco |
KeyCorp and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and WesBanco
The main advantage of trading using opposite KeyCorp and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third Bancorp |
| WesBanco vs. Capital One Financial | WesBanco vs. Capital One Financial | WesBanco vs. Bank of America | WesBanco vs. KeyCorp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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