Correlation Between KeyCorp and Citizens Holding
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Citizens Holding 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 Citizens Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Citizens Holding, you can compare the effects of market volatilities on KeyCorp and Citizens Holding 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 Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Citizens Holding.
Diversification Opportunities for KeyCorp and Citizens Holding
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KeyCorp and Citizens is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding 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 Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of KeyCorp i.e., KeyCorp and Citizens Holding go up and down completely randomly.
Pair Corralation between KeyCorp and Citizens Holding
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.89 times more return on investment than Citizens Holding. However, KeyCorp is 1.13 times less risky than Citizens Holding. It trades about 0.02 of its potential returns per unit of risk. Citizens Holding is currently generating about -0.02 per unit of risk. If you would invest 2,182 in KeyCorp on August 28, 2024 and sell it today you would earn a total of 326.00 from holding KeyCorp or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.72% |
| Values | Daily Returns |
KeyCorp vs. Citizens Holding
Performance |
| Timeline |
| KeyCorp |
| Citizens Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KeyCorp and Citizens Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Citizens Holding
The main advantage of trading using opposite KeyCorp and Citizens Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Citizens Holding 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 Citizens Holding will offset losses from the drop in Citizens Holding's long position.The idea behind KeyCorp and Citizens Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Citizens Holding vs. Home Federal Bancorp | Citizens Holding vs. Lake Shore Bancorp | Citizens Holding vs. Community West Bancshares | Citizens Holding vs. Magyar Bancorp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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