Correlation Between KeyCorp and Central Pacific
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Central Pacific 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 Central Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Central Pacific Financial, you can compare the effects of market volatilities on KeyCorp and Central Pacific 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 Central Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Central Pacific.
Diversification Opportunities for KeyCorp and Central Pacific
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KeyCorp and Central is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Central Pacific Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pacific Financial 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 Central Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pacific Financial has no effect on the direction of KeyCorp i.e., KeyCorp and Central Pacific go up and down completely randomly.
Pair Corralation between KeyCorp and Central Pacific
Considering the 90-day investment horizon KeyCorp is expected to generate 1.28 times less return on investment than Central Pacific. In addition to that, KeyCorp is 1.09 times more volatile than Central Pacific Financial. It trades about 0.09 of its total potential returns per unit of risk. Central Pacific Financial is currently generating about 0.13 per unit of volatility. If you would invest 1,769 in Central Pacific Financial on August 31, 2024 and sell it today you would earn a total of 1,470 from holding Central Pacific Financial or generate 83.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Central Pacific Financial
Performance |
| Timeline |
| KeyCorp |
| Central Pacific Financial |
KeyCorp and Central Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Central Pacific
The main advantage of trading using opposite KeyCorp and Central Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Central Pacific 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 Central Pacific will offset losses from the drop in Central Pacific's long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| Central Pacific vs. KeyCorp | Central Pacific vs. Comerica | Central Pacific vs. First Horizon National | Central Pacific vs. Western Alliance Bancorporation |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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