Correlation Between Lloyds Banking and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and KeyCorp 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 Lloyds Banking and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lloyds Banking Group and KeyCorp, you can compare the effects of market volatilities on Lloyds Banking and KeyCorp 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 Lloyds Banking with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and KeyCorp.
Diversification Opportunities for Lloyds Banking and KeyCorp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lloyds and KeyCorp is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Lloyds Banking 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 Lloyds Banking Group are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and KeyCorp go up and down completely randomly.
Pair Corralation between Lloyds Banking and KeyCorp
Assuming the 90 days trading horizon Lloyds Banking is expected to generate 44.11 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Lloyds Banking Group is 3.32 times less risky than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,941 in KeyCorp on September 12, 2024 and sell it today you would earn a total of 2,591 from holding KeyCorp or generate 28.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. KeyCorp
Performance |
| Timeline |
| Lloyds Banking Group |
| KeyCorp |
Lloyds Banking and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and KeyCorp
The main advantage of trading using opposite Lloyds Banking and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Lloyds Banking vs. Banco Santander Chile | Lloyds Banking vs. Fundo Investimento Imobiliario | Lloyds Banking vs. LESTE FDO INV | Lloyds Banking vs. Fras le SA |
| KeyCorp vs. New Oriental Education | KeyCorp vs. Extra Space Storage | KeyCorp vs. Telecomunicaes Brasileiras SA | KeyCorp vs. Healthpeak Properties |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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