Correlation Between EON Resources and KeyCorp

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

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

Diversification Opportunities for EON Resources and KeyCorp

-0.05

Correlation Coefficient

EON Resources  KeyCorp

Good diversification

The 3 months correlation between EON and KeyCorp is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and EON Resources 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 EON Resources 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 EON Resources i.e., EON Resources and KeyCorp go up and down completely randomly.

Pair Corralation between EON Resources and KeyCorp

Given the investment horizon of 90 days EON Resources is expected to generate 21.07 times more return on investment than KeyCorp. However, EON Resources is 21.07 times more volatile than KeyCorp. It trades about 0.04 of its potential returns per unit of risk. KeyCorp is currently generating about -0.05 per unit of risk. If you would invest  102.00  in EON Resources on September 12, 2024 and sell it today you would lose (18.30) from holding EON Resources or give up 17.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

EON Resources  vs.  KeyCorp

EON Resources

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EON Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, EON Resources reported 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 EON Resources and KeyCorp

The main advantage of trading using opposite EON Resources and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON Resources 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 EON Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.