Correlation Between KeyCorp and JPMorgan Chase

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

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

Diversification Opportunities for KeyCorp and JPMorgan Chase

0.4

Correlation Coefficient

KeyCorp  JPMorgan Chase

Very weak diversification

The 3 months correlation between KeyCorp and JPMorgan is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and KeyCorp 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 KeyCorp are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of KeyCorp i.e., KeyCorp and JPMorgan Chase go up and down completely randomly.

Pair Corralation between KeyCorp and JPMorgan Chase

Assuming the 90 days trading horizon KeyCorp is expected to generate 0.93 times more return on investment than JPMorgan Chase. However, KeyCorp is 1.07 times less risky than JPMorgan Chase. It trades about -0.08 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about -0.16 per unit of risk. If you would invest  2,523  in KeyCorp on September 13, 2024 and sell it today you would lose (99.00) from holding KeyCorp or give up 3.92% of portfolio value over 90 days.

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

KeyCorp  vs.  JPMorgan Chase Co

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.

JPMorgan Chase

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Chase Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Preferred Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with KeyCorp and JPMorgan Chase

The main advantage of trading using opposite KeyCorp and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase's long position.

The idea behind KeyCorp and JPMorgan Chase Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.