Correlation Between Iridium Communications and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Kaiser Aluminum, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Kaiser Aluminum.
Diversification Opportunities for Iridium Communications and Kaiser Aluminum
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iridium and Kaiser is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Iridium Communications and Kaiser Aluminum
Assuming the 90 days horizon Iridium Communications is expected to generate 1.45 times less return on investment than Kaiser Aluminum. In addition to that, Iridium Communications is 1.13 times more volatile than Kaiser Aluminum. It trades about 0.08 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.12 per unit of volatility. If you would invest 6,421 in Kaiser Aluminum on September 13, 2024 and sell it today you would earn a total of 1,029 from holding Kaiser Aluminum or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Kaiser Aluminum
Performance |
| Timeline |
| Iridium Communications |
| Kaiser Aluminum |
Iridium Communications and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Kaiser Aluminum
The main advantage of trading using opposite Iridium Communications and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
| Kaiser Aluminum vs. Norsk Hydro ASA | Kaiser Aluminum vs. Aluminum of | Kaiser Aluminum vs. Superior Plus Corp | Kaiser Aluminum vs. SIVERS SEMICONDUCTORS AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |