Correlation Between Village Bank and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Village Bank 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 Village Bank and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Bank and and KeyCorp, you can compare the effects of market volatilities on Village Bank 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 Village Bank with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Bank and KeyCorp.
Diversification Opportunities for Village Bank and KeyCorp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Village and KeyCorp is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Village Bank and and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Village Bank 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 Village Bank and 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 Village Bank i.e., Village Bank and KeyCorp go up and down completely randomly.
Pair Corralation between Village Bank and KeyCorp
Given the investment horizon of 90 days Village Bank and is expected to generate 64.16 times more return on investment than KeyCorp. However, Village Bank is 64.16 times more volatile than KeyCorp. It trades about 0.14 of its potential returns per unit of risk. KeyCorp is currently generating about 0.12 per unit of risk. If you would invest 4,877 in Village Bank and on August 31, 2024 and sell it today you would earn a total of 2,903 from holding Village Bank and or generate 59.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.5% |
| Values | Daily Returns |
Village Bank and vs. KeyCorp
Performance |
| Timeline |
| Village Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| KeyCorp |
Village Bank and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Village Bank and KeyCorp
The main advantage of trading using opposite Village Bank and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Bank 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.| Village Bank vs. KeyCorp | Village Bank vs. Comerica | Village Bank vs. First Horizon National | Village Bank vs. Western Alliance Bancorporation |
| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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