Correlation Between Apple and KEYCORP

Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and KEYCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and KEYCORP MTN, you can compare the effects of market volatilities on Apple 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 Apple with a short position of KEYCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and KEYCORP.

Diversification Opportunities for Apple and KEYCORP

-0.41

Correlation Coefficient

Apple  KEYCORP

Very good diversification

The 3 months correlation between Apple and KEYCORP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KEYCORP MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MTN and Apple 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 Apple Inc 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 MTN has no effect on the direction of Apple i.e., Apple and KEYCORP go up and down completely randomly.

Pair Corralation between Apple and KEYCORP

Given the investment horizon of 90 days Apple Inc is expected to generate 1.85 times more return on investment than KEYCORP. However, Apple is 1.85 times more volatile than KEYCORP MTN. It trades about 0.12 of its potential returns per unit of risk. KEYCORP MTN is currently generating about -0.05 per unit of risk. If you would invest  21,277  in Apple Inc on September 24, 2024 and sell it today you would earn a total of  4,172  from holding Apple Inc or generate 19.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Apple Inc  vs.  KEYCORP MTN

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEYCORP MTN investors.

Pair Trading with Apple and KEYCORP

The main advantage of trading using opposite Apple and KEYCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and KEYCORP MTN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.