Correlation Between KeyCorp and Independent Bank
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Independent Bank 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 Independent Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Independent Bank Group, you can compare the effects of market volatilities on KeyCorp and Independent Bank 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Independent Bank.
Diversification Opportunities for KeyCorp and Independent Bank
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KeyCorp and Independent is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Independent Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of KeyCorp i.e., KeyCorp and Independent Bank go up and down completely randomly.
Pair Corralation between KeyCorp and Independent Bank
Considering the 90-day investment horizon KeyCorp is expected to generate 1.14 times more return on investment than Independent Bank. However, KeyCorp is 1.14 times more volatile than Independent Bank Group. It trades about 0.03 of its potential returns per unit of risk. Independent Bank Group is currently generating about 0.02 per unit of risk. If you would invest 1,539 in KeyCorp on August 27, 2024 and sell it today you would earn a total of 421.00 from holding KeyCorp or generate 27.36% 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. Independent Bank Group
Performance |
| Timeline |
| KeyCorp |
| Independent Bank |
KeyCorp and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Independent Bank
The main advantage of trading using opposite KeyCorp and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank's long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| Independent Bank vs. Heritage Financial | Independent Bank vs. ConnectOne Bancorp | Independent Bank vs. Home Bancorp | Independent Bank vs. National Bank Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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