Correlation Between Vita Coco and KeyCorp

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

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

Diversification Opportunities for Vita Coco and KeyCorp

-0.27

Correlation Coefficient

Vita Coco  KeyCorp

Very good diversification

The 3 months correlation between Vita and KeyCorp is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and KeyCorp go up and down completely randomly.

Pair Corralation between Vita Coco and KeyCorp

Given the investment horizon of 90 days Vita Coco is expected to generate 1.86 times more return on investment than KeyCorp. However, Vita Coco is 1.86 times more volatile than KeyCorp. It trades about 0.2 of its potential returns per unit of risk. KeyCorp is currently generating about -0.07 per unit of risk. If you would invest  3,516  in Vita Coco on September 13, 2024 and sell it today you would earn a total of  239.00  from holding Vita Coco or generate 6.8% return on investment over 90 days.

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

Vita Coco  vs.  KeyCorp

Vita Coco

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vita Coco and KeyCorp

The main advantage of trading using opposite Vita Coco and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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 Vita Coco 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..