Correlation Between KeyCorp and Credicorp
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Credicorp 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 Credicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Credicorp, you can compare the effects of market volatilities on KeyCorp and Credicorp 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 Credicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Credicorp.
Diversification Opportunities for KeyCorp and Credicorp
Poor diversification
The 3 months correlation between KeyCorp and Credicorp is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp 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 Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of KeyCorp i.e., KeyCorp and Credicorp go up and down completely randomly.
Pair Corralation between KeyCorp and Credicorp
Considering the 90-day investment horizon KeyCorp is expected to generate 1.88 times more return on investment than Credicorp. However, KeyCorp is 1.88 times more volatile than Credicorp. It trades about 0.11 of its potential returns per unit of risk. Credicorp is currently generating about 0.11 per unit of risk. If you would invest 1,673 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 275.00 from holding KeyCorp or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Credicorp
Performance |
| Timeline |
| KeyCorp |
| Credicorp |
KeyCorp and Credicorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Credicorp
The main advantage of trading using opposite KeyCorp and Credicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Credicorp 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 Credicorp will offset losses from the drop in Credicorp's long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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