Correlation Between Aluminumof China and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and KeyCorp 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 Aluminumof China and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and KeyCorp, you can compare the effects of market volatilities on Aluminumof China and KeyCorp 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 Aluminumof China with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and KeyCorp.
Diversification Opportunities for Aluminumof China and KeyCorp
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aluminumof and KeyCorp is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Aluminumof China 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 of are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Aluminumof China i.e., Aluminumof China and KeyCorp go up and down completely randomly.
Pair Corralation between Aluminumof China and KeyCorp
Assuming the 90 days horizon Aluminum of is expected to generate 1.07 times more return on investment than KeyCorp. However, Aluminumof China is 1.07 times more volatile than KeyCorp. It trades about 0.05 of its potential returns per unit of risk. KeyCorp is currently generating about 0.02 per unit of risk. If you would invest 31.00 in Aluminum of on October 15, 2024 and sell it today you would earn a total of 26.00 from holding Aluminum of or generate 83.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. KeyCorp
Performance |
| Timeline |
| Aluminumof China |
| KeyCorp |
Aluminumof China and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and KeyCorp
The main advantage of trading using opposite Aluminumof China and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Aluminumof China vs. GOODYEAR T RUBBER | Aluminumof China vs. PLAYTIKA HOLDING DL 01 | Aluminumof China vs. VIVA WINE GROUP | Aluminumof China vs. Playmates Toys Limited |
| KeyCorp vs. Hyrican Informationssysteme Aktiengesellschaft | KeyCorp vs. Aluminum of | KeyCorp vs. Jacquet Metal Service | KeyCorp vs. FIREWEED METALS P |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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