Correlation Between MACOM Technology and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Kaiser Aluminum, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Kaiser Aluminum.
Diversification Opportunities for MACOM Technology and Kaiser Aluminum
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and Kaiser is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between MACOM Technology and Kaiser Aluminum
Assuming the 90 days horizon MACOM Technology Solutions is expected to under-perform the Kaiser Aluminum. In addition to that, MACOM Technology is 2.15 times more volatile than Kaiser Aluminum. It trades about -0.05 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.02 per unit of volatility. If you would invest 6,723 in Kaiser Aluminum on November 6, 2024 and sell it today you would earn a total of 27.00 from holding Kaiser Aluminum or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Kaiser Aluminum
Performance |
| Timeline |
| MACOM Technology Sol |
| Kaiser Aluminum |
MACOM Technology and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Kaiser Aluminum
The main advantage of trading using opposite MACOM Technology and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. Take Two Interactive Software | MACOM Technology vs. PSI Software AG | MACOM Technology vs. MAG SILVER | MACOM Technology vs. Perseus Mining Limited |
| Kaiser Aluminum vs. G III APPAREL GROUP | Kaiser Aluminum vs. USWE SPORTS AB | Kaiser Aluminum vs. Yuexiu Transport Infrastructure | Kaiser Aluminum vs. TITANIUM TRANSPORTGROUP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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