Correlation Between KeyCorp and Ensign

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Can any of the company-specific risk be diversified away by investing in both KeyCorp and Ensign 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 Ensign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and The Ensign Group, you can compare the effects of market volatilities on KeyCorp and Ensign 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 Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Ensign.

Diversification Opportunities for KeyCorp and Ensign

 0.5 Correlation Coefficient

Very weak diversification

The 3 months correlation between KeyCorp and Ensign is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group 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 Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of KeyCorp i.e., KeyCorp and Ensign go up and down completely randomly.

Pair Corralation between KeyCorp and Ensign

Assuming the 90 days horizon KeyCorp is expected to under-perform the Ensign. In addition to that, KeyCorp is 1.12 times more volatile than The Ensign Group. It trades about -0.03 of its total potential returns per unit of risk. The Ensign Group is currently generating about 0.11 per unit of volatility. If you would invest  10,700  in The Ensign Group on November 24, 2023 and sell it today you would earn a total of  400.00  from holding The Ensign Group or generate 3.74% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Weak Accuracy 100.0% Values Daily Returns

KeyCorp  vs.  The Ensign Group

 Performance
 Timeline
 KeyCorp Correlation Profile

10 of 100

 Low High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KeyCorp reported solid returns over the last few months and may actually be approaching a breakup point.
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 Ensign Group Correlation Profile

10 of 100

 Low High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Ensign Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ensign reported solid returns over the last few months and may actually be approaching a breakup point.
 Performance Backtest Predict

KeyCorp and Ensign Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with KeyCorp and Ensign

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