Correlation Between KeyCorp and Woodside Energy

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Can any of the company-specific risk be diversified away by investing in both KeyCorp and Woodside Energy 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 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

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between KeyCorp and Woodside is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy 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 Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of KeyCorp i.e., KeyCorp and Woodside Energy go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

KeyCorp  vs.  Woodside Energy Group

 Performance 
       Timeline  
KeyCorp 

Risk-Adjusted Performance

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. In spite of fairly conflicting technical and fundamental indicators, KeyCorp showed solid returns over the last few months and may actually be approaching a breakup point.
Woodside Energy Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Woodside Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

KeyCorp and Woodside Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KeyCorp and Woodside Energy

The 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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