Correlation Between Quaker Chemical and KeyCorp

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

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

Diversification Opportunities for Quaker Chemical and KeyCorp

0.5

Correlation Coefficient

Quaker Chemical  KeyCorp

Very weak diversification

The 3 months correlation between Quaker and KeyCorp is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and KeyCorp go up and down completely randomly.

Pair Corralation between Quaker Chemical and KeyCorp

Assuming the 90 days horizon Quaker Chemical is expected to under-perform the KeyCorp. In addition to that, Quaker Chemical is 1.18 times more volatile than KeyCorp. It trades about -0.08 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.1 per unit of volatility. If you would invest  1,456  in KeyCorp on September 28, 2024 and sell it today you would earn a total of  172.00  from holding KeyCorp or generate 11.81% return on investment over 90 days.

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

Quaker Chemical  vs.  KeyCorp

Quaker Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quaker Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

KeyCorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, KeyCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Quaker Chemical and KeyCorp

The main advantage of trading using opposite Quaker Chemical and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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 Quaker Chemical 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.