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, 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

0.81

Correlation Coefficient

Apple  KeyCorp

Very poor diversification

The 3 months correlation between Apple and KeyCorp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 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

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.88 times more return on investment than KeyCorp. However, Apple Inc is 1.14 times less risky than KeyCorp. It trades about 0.58 of its potential returns per unit of risk. KeyCorp is currently generating about -0.15 per unit of risk. If you would invest  6,650  in Apple Inc on September 25, 2024 and sell it today you would earn a total of  1,260  from holding Apple Inc or generate 18.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Apple Inc  vs.  KeyCorp

Apple Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

KeyCorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KeyCorp sustained solid returns over the last few months and may actually be approaching a breakup point.

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 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.