Correlation Between Woori Financial and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Woori Financial 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 Woori Financial and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Financial Group and KeyCorp, you can compare the effects of market volatilities on Woori Financial 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 Woori Financial with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Financial and KeyCorp.
Diversification Opportunities for Woori Financial and KeyCorp
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woori and KeyCorp is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Woori Financial Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Woori Financial 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 Woori Financial Group 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 Woori Financial i.e., Woori Financial and KeyCorp go up and down completely randomly.
Pair Corralation between Woori Financial and KeyCorp
Allowing for the 90-day total investment horizon Woori Financial Group is expected to generate 0.75 times more return on investment than KeyCorp. However, Woori Financial Group is 1.34 times less risky than KeyCorp. It trades about 0.06 of its potential returns per unit of risk. KeyCorp is currently generating about 0.02 per unit of risk. If you would invest 2,307 in Woori Financial Group on August 27, 2024 and sell it today you would earn a total of 1,272 from holding Woori Financial Group or generate 55.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woori Financial Group vs. KeyCorp
Performance |
| Timeline |
| Woori Financial Group |
| KeyCorp |
Woori Financial and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woori Financial and KeyCorp
The main advantage of trading using opposite Woori Financial and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Financial 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.| Woori Financial vs. Banco Santander Brasil | Woori Financial vs. CrossFirst Bankshares | Woori Financial vs. Banco Bradesco SA | Woori Financial vs. CF Bankshares |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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