Correlation Between Merchants Bancorp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Merchants Bancorp 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 Merchants Bancorp and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Bancorp and KeyCorp, you can compare the effects of market volatilities on Merchants Bancorp 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 Merchants Bancorp with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Bancorp and KeyCorp.
Diversification Opportunities for Merchants Bancorp and KeyCorp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merchants and KeyCorp is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp i.e., Merchants Bancorp and KeyCorp go up and down completely randomly.
Pair Corralation between Merchants Bancorp and KeyCorp
Assuming the 90 days horizon Merchants Bancorp is expected to generate 1.46 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Merchants Bancorp is 6.75 times less risky than KeyCorp. It trades about 0.41 of its potential returns per unit of risk. KeyCorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,532 in KeyCorp on September 2, 2024 and sell it today you would earn a total of 34.00 from holding KeyCorp or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merchants Bancorp vs. KeyCorp
Performance |
| Timeline |
| Merchants Bancorp |
| KeyCorp |
Merchants Bancorp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Bancorp and KeyCorp
The main advantage of trading using opposite Merchants Bancorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Bancorp 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.| Merchants Bancorp vs. Medallion Bank PR | Merchants Bancorp vs. Northern Trust | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Valley National Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |