Correlation Between Washington Federal and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and KeyCorp, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and KeyCorp.
Diversification Opportunities for Washington Federal and KeyCorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and KeyCorp is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and KeyCorp go up and down completely randomly.
Pair Corralation between Washington Federal and KeyCorp
Assuming the 90 days horizon Washington Federal is expected to under-perform the KeyCorp. In addition to that, Washington Federal is 1.07 times more volatile than KeyCorp. It trades about -0.08 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.02 per unit of volatility. If you would invest 2,242 in KeyCorp on October 25, 2024 and sell it today you would lose (42.00) from holding KeyCorp or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. KeyCorp
Performance |
| Timeline |
| Washington Federal |
| KeyCorp |
Washington Federal and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and KeyCorp
The main advantage of trading using opposite Washington Federal and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Fulton Financial | Washington Federal vs. Texas Capital Bancshares | Washington Federal vs. Huntington Bancshares Incorporated | Washington Federal vs. Wintrust Financial Corp |
| KeyCorp vs. Texas Capital Bancshares | KeyCorp vs. Washington Federal | KeyCorp vs. First Guaranty Bancshares | KeyCorp vs. Aquagold International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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