Correlation Between MidCap Financial and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both MidCap Financial 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 MidCap Financial and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and Kaiser Aluminum, you can compare the effects of market volatilities on MidCap Financial 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 MidCap Financial with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Kaiser Aluminum.
Diversification Opportunities for MidCap Financial and Kaiser Aluminum
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between MidCap and Kaiser is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between MidCap Financial and Kaiser Aluminum
Assuming the 90 days trading horizon MidCap Financial is expected to generate 1.41 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, MidCap Financial Investment is 1.39 times less risky than Kaiser Aluminum. It trades about 0.07 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,525 in Kaiser Aluminum on October 31, 2024 and sell it today you would earn a total of 125.00 from holding Kaiser Aluminum or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
MidCap Financial Investment vs. Kaiser Aluminum
Performance |
| Timeline |
| MidCap Financial Inv |
| Kaiser Aluminum |
MidCap Financial and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Kaiser Aluminum
The main advantage of trading using opposite MidCap Financial and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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.| MidCap Financial vs. THAI BEVERAGE | MidCap Financial vs. TEN SQUARE GAMES | MidCap Financial vs. TYSON FOODS A | MidCap Financial vs. OURGAME INTHOLDL 00005 |
| Kaiser Aluminum vs. Corporate Travel Management | Kaiser Aluminum vs. Molson Coors Beverage | Kaiser Aluminum vs. Ares Management Corp | Kaiser Aluminum vs. The Boston Beer |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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