Correlation Between KeyCorp and Farmers National
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Farmers National 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 Farmers National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Farmers National Banc, you can compare the effects of market volatilities on KeyCorp and Farmers National 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 Farmers National. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Farmers National.
Diversification Opportunities for KeyCorp and Farmers National
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and Farmers is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Farmers National Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers National Banc 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 Farmers National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers National Banc has no effect on the direction of KeyCorp i.e., KeyCorp and Farmers National go up and down completely randomly.
Pair Corralation between KeyCorp and Farmers National
Considering the 90-day investment horizon KeyCorp is expected to under-perform the Farmers National. In addition to that, KeyCorp is 1.41 times more volatile than Farmers National Banc. It trades about -0.1 of its total potential returns per unit of risk. Farmers National Banc is currently generating about 0.22 per unit of volatility. If you would invest 1,376 in Farmers National Banc on December 2, 2024 and sell it today you would earn a total of 73.00 from holding Farmers National Banc or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Farmers National Banc
Performance |
| Timeline |
| KeyCorp |
| Farmers National Banc |
KeyCorp and Farmers National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Farmers National
The main advantage of trading using opposite KeyCorp and Farmers National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Farmers National 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 Farmers National will offset losses from the drop in Farmers National's long position.| KeyCorp vs. Western Alliance Bancorporation | ||
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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