Correlation Between KEYCORP and Air Products

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

By analyzing existing cross correlation between KEYCORP MTN and Air Products and, you can compare the effects of market volatilities on KEYCORP and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYCORP and Air Products.

Diversification Opportunities for KEYCORP and Air Products

0.18

Correlation Coefficient

KEYCORP  Air Products

Average diversification

The 3 months correlation between KEYCORP and Air is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KEYCORP MTN and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 MTN are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of KEYCORP i.e., KEYCORP and Air Products go up and down completely randomly.

Pair Corralation between KEYCORP and Air Products

Assuming the 90 days trading horizon KEYCORP MTN is expected to under-perform the Air Products. In addition to that, KEYCORP is 1.42 times more volatile than Air Products and. It trades about -0.08 of its total potential returns per unit of risk. Air Products and is currently generating about 0.01 per unit of volatility. If you would invest  29,396  in Air Products and on September 25, 2024 and sell it today you would earn a total of  103.00  from holding Air Products and or generate 0.35% return on investment over 90 days.

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

KEYCORP MTN  vs.  Air Products and

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEYCORP MTN investors.

Air Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Products and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Air Products is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KEYCORP and Air Products

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

The idea behind KEYCORP MTN and Air Products and 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.