Correlation Between Huntington Bancshares and KeyCorp

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

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

Diversification Opportunities for Huntington Bancshares and KeyCorp

0.15

Correlation Coefficient

Huntington Bancshares  KeyCorp

Average diversification

The 3 months correlation between Huntington and KeyCorp is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Huntington Bancshares i.e., Huntington Bancshares and KeyCorp go up and down completely randomly.

Pair Corralation between Huntington Bancshares and KeyCorp

Assuming the 90 days horizon Huntington Bancshares Incorporated is expected to under-perform the KeyCorp. In addition to that, Huntington Bancshares is 1.69 times more volatile than KeyCorp. It trades about -0.2 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.07 per unit of volatility. If you would invest  2,447  in KeyCorp on September 27, 2024 and sell it today you would lose (64.00) from holding KeyCorp or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Huntington Bancshares Incorpor  vs.  KeyCorp

Huntington Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Bancshares Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 quite persistent basic indicators, KeyCorp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Huntington Bancshares and KeyCorp

The main advantage of trading using opposite Huntington Bancshares and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.