Correlation Between VersaBank and KeyCorp
Can any of the company-specific risk be diversified away by investing in both VersaBank 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 VersaBank and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and KeyCorp, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and KeyCorp.
Diversification Opportunities for VersaBank and KeyCorp
Poor diversification
The 3 months correlation between VersaBank and KeyCorp is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and VersaBank 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 VersaBank 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 VersaBank i.e., VersaBank and KeyCorp go up and down completely randomly.
Pair Corralation between VersaBank and KeyCorp
Given the investment horizon of 90 days VersaBank is expected to generate 1.18 times more return on investment than KeyCorp. However, VersaBank is 1.18 times more volatile than KeyCorp. It trades about 0.13 of its potential returns per unit of risk. KeyCorp is currently generating about 0.08 per unit of risk. If you would invest 642.00 in VersaBank on August 27, 2024 and sell it today you would earn a total of 1,070 from holding VersaBank or generate 166.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. KeyCorp
Performance |
| Timeline |
| VersaBank |
| KeyCorp |
VersaBank and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and KeyCorp
The main advantage of trading using opposite VersaBank and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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