Correlation Between KeyCorp and HCB Financial
Can any of the company-specific risk be diversified away by investing in both KeyCorp and HCB Financial 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 HCB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and HCB Financial Corp, you can compare the effects of market volatilities on KeyCorp and HCB Financial 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 HCB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and HCB Financial.
Diversification Opportunities for KeyCorp and HCB Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and HCB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and HCB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCB Financial Corp 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 HCB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCB Financial Corp has no effect on the direction of KeyCorp i.e., KeyCorp and HCB Financial go up and down completely randomly.
Pair Corralation between KeyCorp and HCB Financial
Considering the 90-day investment horizon KeyCorp is expected to generate 1.7 times more return on investment than HCB Financial. However, KeyCorp is 1.7 times more volatile than HCB Financial Corp. It trades about 0.2 of its potential returns per unit of risk. HCB Financial Corp is currently generating about 0.17 per unit of risk. If you would invest 1,704 in KeyCorp on September 3, 2024 and sell it today you would earn a total of 244.00 from holding KeyCorp or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. HCB Financial Corp
Performance |
| Timeline |
| KeyCorp |
| HCB Financial Corp |
KeyCorp and HCB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and HCB Financial
The main advantage of trading using opposite KeyCorp and HCB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, HCB Financial 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 HCB Financial will offset losses from the drop in HCB Financial's long position.| KeyCorp vs. JPMorgan Chase Co | KeyCorp vs. Citigroup | KeyCorp vs. Wells Fargo | KeyCorp vs. Toronto Dominion Bank |
| HCB Financial vs. Huntington Bancshares Incorporated | HCB Financial vs. KeyCorp | HCB Financial vs. PNC Financial Services | HCB Financial vs. Regions Financial |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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