Correlation Between Air New and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Kaiser Aluminum, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Kaiser Aluminum.
Diversification Opportunities for Air New and Kaiser Aluminum
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Kaiser is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Air New 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 Air New Zealand 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 Air New i.e., Air New and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Air New and Kaiser Aluminum
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.63 times more return on investment than Kaiser Aluminum. However, Air New Zealand is 1.59 times less risky than Kaiser Aluminum. It trades about 0.05 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.03 per unit of risk. If you would invest 29.00 in Air New Zealand on September 27, 2024 and sell it today you would earn a total of 3.00 from holding Air New Zealand or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Kaiser Aluminum
Performance |
| Timeline |
| Air New Zealand |
| Kaiser Aluminum |
Air New and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Kaiser Aluminum
The main advantage of trading using opposite Air New and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. SLR Investment Corp | Air New vs. Citic Telecom International | Air New vs. Consolidated Communications Holdings | Air New vs. Spirent Communications plc |
| Kaiser Aluminum vs. ARDAGH METAL PACDL 0001 | Kaiser Aluminum vs. JD SPORTS FASH | Kaiser Aluminum vs. InPlay Oil Corp | Kaiser Aluminum vs. DISTRICT METALS |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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