Correlation Between Visa and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and KeyCorp, you can compare the effects of market volatilities on Visa 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 Visa with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and KeyCorp.
Diversification Opportunities for Visa and KeyCorp
Average diversification
The 3 months correlation between Visa and KeyCorp is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Visa 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 Visa Class A 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 Visa i.e., Visa and KeyCorp go up and down completely randomly.
Pair Corralation between Visa and KeyCorp
Taking into account the 90-day investment horizon Visa is expected to generate 2.13 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Visa Class A is 4.38 times less risky than KeyCorp. It trades about 0.09 of its potential returns per unit of risk. KeyCorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,360 in KeyCorp on August 28, 2024 and sell it today you would earn a total of 3,036 from holding KeyCorp or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 70.1% |
| Values | Daily Returns |
Visa Class A vs. KeyCorp
Performance |
| Timeline |
| Visa Class A |
| KeyCorp |
Visa and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and KeyCorp
The main advantage of trading using opposite Visa and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| KeyCorp vs. Fras le SA | KeyCorp vs. Clave Indices De | KeyCorp vs. BTG Pactual Logstica | KeyCorp vs. Telefonaktiebolaget LM Ericsson |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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