Correlation Between KeyCorp and Beauty Health
Can any of the company-specific risk be diversified away by investing in both KeyCorp and Beauty Health 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 Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Beauty Health Co, you can compare the effects of market volatilities on KeyCorp and Beauty Health 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 Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Beauty Health.
Diversification Opportunities for KeyCorp and Beauty Health
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between KeyCorp and Beauty is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of KeyCorp i.e., KeyCorp and Beauty Health go up and down completely randomly.
Pair Corralation between KeyCorp and Beauty Health
Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Beauty Health. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 5.87 times less risky than Beauty Health. The preferred stock trades about -0.13 of its potential returns per unit of risk. The Beauty Health Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 132.00 in Beauty Health Co on September 25, 2024 and sell it today you would earn a total of 12.00 from holding Beauty Health Co or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KeyCorp vs. Beauty Health Co
Performance |
Timeline |
KeyCorp |
Beauty Health |
KeyCorp and Beauty Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KeyCorp and Beauty Health
The main advantage of trading using opposite KeyCorp and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.KeyCorp vs. Tectonic Financial PR | KeyCorp vs. First Guaranty Bancshares | KeyCorp vs. First Merchants | KeyCorp vs. Metropolitan Bank Holding |
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Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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