Correlation Between KeyCorp and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both KeyCorp and OptimumBank Holdings 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 OptimumBank Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and OptimumBank Holdings, you can compare the effects of market volatilities on KeyCorp and OptimumBank Holdings 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 OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and OptimumBank Holdings.
Diversification Opportunities for KeyCorp and OptimumBank Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and OptimumBank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings 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 OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of KeyCorp i.e., KeyCorp and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between KeyCorp and OptimumBank Holdings
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.29 times more return on investment than OptimumBank Holdings. However, KeyCorp is 3.48 times less risky than OptimumBank Holdings. It trades about 0.07 of its potential returns per unit of risk. OptimumBank Holdings is currently generating about -0.05 per unit of risk. If you would invest 2,462 in KeyCorp on September 13, 2024 and sell it today you would earn a total of 18.00 from holding KeyCorp or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. OptimumBank Holdings
Performance |
| Timeline |
| KeyCorp |
| OptimumBank Holdings |
KeyCorp and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and OptimumBank Holdings
The main advantage of trading using opposite KeyCorp and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' long position.The idea behind KeyCorp and OptimumBank Holdings 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.| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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