Correlation Between Axalta Coating and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Axalta Coating 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 Axalta Coating and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Kaiser Aluminum, you can compare the effects of market volatilities on Axalta Coating 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 Axalta Coating with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Kaiser Aluminum.
Diversification Opportunities for Axalta Coating and Kaiser Aluminum
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Axalta and Kaiser is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Axalta Coating and Kaiser Aluminum
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.57 times more return on investment than Kaiser Aluminum. However, Axalta Coating Systems is 1.75 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 -0.03 per unit of risk. If you would invest 3,587 in Axalta Coating Systems on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Axalta Coating Systems or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Kaiser Aluminum
Performance |
| Timeline |
| Axalta Coating Systems |
| Kaiser Aluminum |
Axalta Coating and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Kaiser Aluminum
The main advantage of trading using opposite Axalta Coating and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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.| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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