diversifiable risk of combining KeyCorp and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Woodside Energy Group, you can compare the effects of market volatilities on KeyCorp and Woodside Energy 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 Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Woodside Energy.
Diversification Opportunities for KeyCorp and Woodside Energy
Pair Corralation between KeyCorp and Woodside Energy
Considering the 90-day investment horizon KeyCorp is expected to generate 1.16 times more return on investment than Woodside Energy. However, KeyCorp is 1.16 times more volatile than Woodside Energy Group. It trades about -0.02 of its potential returns per unit of risk. Woodside Energy Group is currently generating about -0.07 per unit of risk. If you would invest 1,441 in KeyCorp on November 24, 2023 and sell it today you would lose (15.00) from holding KeyCorp or give up 1.04% of portfolio value over 90 days.
KeyCorp vs. Woodside Energy Group
KeyCorp and Woodside Energy Volatility Contrast
Pair Trading with KeyCorp and Woodside EnergyThe main advantage of trading using opposite KeyCorp and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, Woodside Energy 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 Woodside Energy will offset losses from the drop in Woodside Energy's long position. The idea behind KeyCorp and Woodside Energy 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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