Correlation Between Corporate Travel and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Corporate Travel 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 Corporate Travel and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Kaiser Aluminum, you can compare the effects of market volatilities on Corporate Travel 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 Corporate Travel with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Kaiser Aluminum.
Diversification Opportunities for Corporate Travel and Kaiser Aluminum
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Corporate and Kaiser is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Corporate Travel 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 Corporate Travel Management 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 Corporate Travel i.e., Corporate Travel and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Corporate Travel and Kaiser Aluminum
Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Travel Management is 1.07 times less risky than Kaiser Aluminum. The stock trades about 0.0 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,803 in Kaiser Aluminum on November 20, 2024 and sell it today you would lose (153.00) from holding Kaiser Aluminum or give up 2.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Corporate Travel Management vs. Kaiser Aluminum
Performance |
Timeline |
Corporate Travel Man |
Kaiser Aluminum |
Corporate Travel and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Corporate Travel and Kaiser Aluminum
The main advantage of trading using opposite Corporate Travel and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel 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.Corporate Travel vs. Fevertree Drinks PLC | ||
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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