Correlation Between KeyCorp and First Community
Can any of the company-specific risk be diversified away by investing in both KeyCorp and First Community 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 First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and First Community, you can compare the effects of market volatilities on KeyCorp and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and First Community.
Diversification Opportunities for KeyCorp and First Community
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KeyCorp and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of KeyCorp i.e., KeyCorp and First Community go up and down completely randomly.
Pair Corralation between KeyCorp and First Community
Considering the 90-day investment horizon KeyCorp is expected to generate 1.21 times less return on investment than First Community. In addition to that, KeyCorp is 1.33 times more volatile than First Community. It trades about 0.11 of its total potential returns per unit of risk. First Community is currently generating about 0.17 per unit of volatility. If you would invest 2,140 in First Community on September 2, 2024 and sell it today you would earn a total of 461.00 from holding First Community or generate 21.54% 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. First Community
Performance |
| Timeline |
| KeyCorp |
| First Community |
KeyCorp and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and First Community
The main advantage of trading using opposite KeyCorp and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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