Correlation Between Alcoa Corp and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Kaiser Aluminum 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 Alcoa Corp and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Kaiser Aluminum, you can compare the effects of market volatilities on Alcoa Corp and Kaiser Aluminum 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 Alcoa Corp with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Kaiser Aluminum.
Diversification Opportunities for Alcoa Corp and Kaiser Aluminum
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alcoa and Kaiser is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Alcoa Corp and Kaiser Aluminum
Assuming the 90 days horizon Alcoa Corp is expected to generate 1.22 times more return on investment than Kaiser Aluminum. However, Alcoa Corp is 1.22 times more volatile than Kaiser Aluminum. It trades about 0.02 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.02 per unit of risk. If you would invest 3,302 in Alcoa Corp on November 7, 2024 and sell it today you would earn a total of 113.00 from holding Alcoa Corp or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Kaiser Aluminum
Performance |
| Timeline |
| Alcoa Corp |
| Kaiser Aluminum |
Alcoa Corp and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Kaiser Aluminum
The main advantage of trading using opposite Alcoa Corp and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Alcoa Corp vs. GWILLI FOOD | Alcoa Corp vs. COFCO Joycome Foods | Alcoa Corp vs. Nomad Foods | Alcoa Corp vs. Scandinavian Tobacco Group |
| Kaiser Aluminum vs. Merit Medical Systems | Kaiser Aluminum vs. UPDATE SOFTWARE | Kaiser Aluminum vs. Genertec Universal Medical | Kaiser Aluminum vs. Take Two Interactive Software |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |