Correlation Between Boston Beer and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Kaiser Aluminum, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Kaiser Aluminum.
Diversification Opportunities for Boston Beer and Kaiser Aluminum
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Kaiser is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Boston Beer and Kaiser Aluminum
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the Kaiser Aluminum. In addition to that, Boston Beer is 1.05 times more volatile than Kaiser Aluminum. It trades about -0.4 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.06 per unit of volatility. If you would invest 6,624 in Kaiser Aluminum on November 8, 2024 and sell it today you would earn a total of 126.00 from holding Kaiser Aluminum or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Kaiser Aluminum
Performance |
| Timeline |
| Boston Beer |
| Kaiser Aluminum |
Boston Beer and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Kaiser Aluminum
The main advantage of trading using opposite Boston Beer and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. GRIFFIN MINING LTD | Boston Beer vs. GALENA MINING LTD | Boston Beer vs. ANTA SPORTS PRODUCT | Boston Beer vs. PLAY2CHILL SA ZY |
| Kaiser Aluminum vs. Infrastrutture Wireless Italiane | Kaiser Aluminum vs. Inspire Medical Systems | Kaiser Aluminum vs. CREO MEDICAL GRP | Kaiser Aluminum vs. ONWARD MEDICAL BV |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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