Correlation Between KeyCorp and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both KeyCorp and PacWest Bancorp 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 PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and PacWest Bancorp, you can compare the effects of market volatilities on KeyCorp and PacWest Bancorp 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 PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and PacWest Bancorp.
Diversification Opportunities for KeyCorp and PacWest Bancorp
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KeyCorp and PacWest is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp 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 PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of KeyCorp i.e., KeyCorp and PacWest Bancorp go up and down completely randomly.
Pair Corralation between KeyCorp and PacWest Bancorp
Considering the 90-day investment horizon KeyCorp is expected to generate 0.27 times more return on investment than PacWest Bancorp. However, KeyCorp is 3.77 times less risky than PacWest Bancorp. It trades about 0.03 of its potential returns per unit of risk. PacWest Bancorp is currently generating about 0.01 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 Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
KeyCorp vs. PacWest Bancorp
Performance |
| Timeline |
| KeyCorp |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KeyCorp and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and PacWest Bancorp
The main advantage of trading using opposite KeyCorp and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third Bancorp |
| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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