Correlation Between Century Aluminum and Four Leaf
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Four Leaf 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 Century Aluminum and Four Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Four Leaf Acquisition, you can compare the effects of market volatilities on Century Aluminum and Four Leaf 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 Century Aluminum with a short position of Four Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Four Leaf.
Diversification Opportunities for Century Aluminum and Four Leaf
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Century and Four is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Four Leaf Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Leaf Acquisition and Century 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 Century Aluminum are associated (or correlated) with Four Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Leaf Acquisition has no effect on the direction of Century Aluminum i.e., Century Aluminum and Four Leaf go up and down completely randomly.
Pair Corralation between Century Aluminum and Four Leaf
Given the investment horizon of 90 days Century Aluminum is expected to generate 23.64 times more return on investment than Four Leaf. However, Century Aluminum is 23.64 times more volatile than Four Leaf Acquisition. It trades about 0.08 of its potential returns per unit of risk. Four Leaf Acquisition is currently generating about 0.12 per unit of risk. If you would invest 1,179 in Century Aluminum on September 14, 2024 and sell it today you would earn a total of 909.50 from holding Century Aluminum or generate 77.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Century Aluminum vs. Four Leaf Acquisition
Performance |
| Timeline |
| Century Aluminum |
| Four Leaf Acquisition |
Century Aluminum and Four Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Four Leaf
The main advantage of trading using opposite Century Aluminum and Four Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Four Leaf 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 Four Leaf will offset losses from the drop in Four Leaf's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Four Leaf vs. Visa Class A | Four Leaf vs. Diamond Hill Investment | Four Leaf vs. Distoken Acquisition | Four Leaf vs. AllianceBernstein Holding LP |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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