Correlation Between Aluminum and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Aluminum 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 Aluminum and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum and Kaiser Aluminum, you can compare the effects of market volatilities on Aluminum 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 Aluminum with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum and Kaiser Aluminum.
Diversification Opportunities for Aluminum and Kaiser Aluminum
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aluminum and Kaiser is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Aluminum 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 Aluminum 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 Aluminum i.e., Aluminum and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Aluminum and Kaiser Aluminum
If you would invest 6,958 in Kaiser Aluminum on August 31, 2024 and sell it today you would earn a total of 1,208 from holding Kaiser Aluminum or generate 17.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.59% |
| Values | Daily Returns |
Aluminum vs. Kaiser Aluminum
Performance |
| Timeline |
| Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kaiser Aluminum |
Aluminum and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminum and Kaiser Aluminum
The main advantage of trading using opposite Aluminum and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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.| Aluminum vs. Anhui Conch Cement | Aluminum vs. Nippon Steel Corp | Aluminum vs. Anhui Conch Cement | Aluminum vs. Anglo American plc |
| Kaiser Aluminum vs. RLJ Lodging Trust | Kaiser Aluminum vs. Aquagold International | Kaiser Aluminum vs. Stepstone Group | Kaiser Aluminum vs. Morningstar Unconstrained Allocation |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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