Correlation Between Sabre Corpo and KEYBANK

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

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

Diversification Opportunities for Sabre Corpo and KEYBANK

0.31

Correlation Coefficient

Sabre Corpo  KEYBANK

Weak diversification

The 3 months correlation between Sabre and KEYBANK is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo and KEYBANK NATL ASSN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYBANK NATL ASSN and Sabre Corpo 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 Sabre Corpo are associated (or correlated) with KEYBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYBANK NATL ASSN has no effect on the direction of Sabre Corpo i.e., Sabre Corpo and KEYBANK go up and down completely randomly.

Pair Corralation between Sabre Corpo and KEYBANK

Given the investment horizon of 90 days Sabre Corpo is expected to generate 9.12 times more return on investment than KEYBANK. However, Sabre Corpo is 9.12 times more volatile than KEYBANK NATL ASSN. It trades about 0.07 of its potential returns per unit of risk. KEYBANK NATL ASSN is currently generating about -0.12 per unit of risk. If you would invest  341.00  in Sabre Corpo on September 24, 2024 and sell it today you would earn a total of  45.00  from holding Sabre Corpo or generate 13.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.38%
Values	Daily Returns

Sabre Corpo  vs.  KEYBANK NATL ASSN

Sabre Corpo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo reported solid returns over the last few months and may actually be approaching a breakup point.

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KEYBANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sabre Corpo and KEYBANK

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

The idea behind Sabre Corpo and KEYBANK NATL ASSN 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.