Correlation Between Western Alliance and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Western Alliance 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 Western Alliance and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Alliance Bancorporation and KeyCorp, you can compare the effects of market volatilities on Western Alliance 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 Western Alliance with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and KeyCorp.
Diversification Opportunities for Western Alliance and KeyCorp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and KeyCorp is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Western Alliance 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 Western Alliance Bancorporation 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 Western Alliance i.e., Western Alliance and KeyCorp go up and down completely randomly.
Pair Corralation between Western Alliance and KeyCorp
Considering the 90-day investment horizon Western Alliance Bancorporation is expected to generate 1.21 times more return on investment than KeyCorp. However, Western Alliance is 1.21 times more volatile than KeyCorp. It trades about 0.11 of its potential returns per unit of risk. KeyCorp is currently generating about 0.1 per unit of risk. If you would invest 5,016 in Western Alliance Bancorporation on August 26, 2024 and sell it today you would earn a total of 4,349 from holding Western Alliance Bancorporation or generate 86.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Alliance Bancorp. vs. KeyCorp
Performance |
| Timeline |
| Western Alliance Ban |
| KeyCorp |
Western Alliance and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and KeyCorp
The main advantage of trading using opposite Western Alliance and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance 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.| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
| KeyCorp vs. Fifth Third Bancorp | KeyCorp vs. Zions Bancorporation | KeyCorp vs. Huntington Bancshares Incorporated | KeyCorp vs. PNC Financial Services |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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