Correlation Between KeyCorp and National Bankshares
Can any of the company-specific risk be diversified away by investing in both KeyCorp and National Bankshares 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 National Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and National Bankshares, you can compare the effects of market volatilities on KeyCorp and National Bankshares 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 National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and National Bankshares.
Diversification Opportunities for KeyCorp and National Bankshares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KeyCorp and National is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 National Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bankshares has no effect on the direction of KeyCorp i.e., KeyCorp and National Bankshares go up and down completely randomly.
Pair Corralation between KeyCorp and National Bankshares
Considering the 90-day investment horizon KeyCorp is expected to generate 1.12 times more return on investment than National Bankshares. However, KeyCorp is 1.12 times more volatile than National Bankshares. It trades about 0.11 of its potential returns per unit of risk. National Bankshares is currently generating about 0.12 per unit of risk. If you would invest 1,673 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 275.00 from holding KeyCorp or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. National Bankshares
Performance |
| Timeline |
| KeyCorp |
| National Bankshares |
KeyCorp and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and National Bankshares
The main advantage of trading using opposite KeyCorp and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, National Bankshares 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 National Bankshares will offset losses from the drop in National Bankshares' long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| National Bankshares vs. Affinity Bancshares | National Bankshares vs. Auburn National Bancorporation | National Bankshares vs. First Community | National Bankshares vs. LINKBANCORP |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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