Correlation Between Century Aluminum and Gap,
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Gap, 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 Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and The Gap,, you can compare the effects of market volatilities on Century Aluminum and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Gap,.
Diversification Opportunities for Century Aluminum and Gap,
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Gap, is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Century Aluminum i.e., Century Aluminum and Gap, go up and down completely randomly.
Pair Corralation between Century Aluminum and Gap,
Given the investment horizon of 90 days Century Aluminum is expected to generate 5.81 times less return on investment than Gap,. But when comparing it to its historical volatility, Century Aluminum is 1.31 times less risky than Gap,. It trades about 0.03 of its potential returns per unit of risk. The Gap, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,190 in The Gap, on September 13, 2024 and sell it today you would earn a total of 228.00 from holding The Gap, or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. The Gap,
Performance |
| Timeline |
| Century Aluminum |
| Gap, |
Century Aluminum and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Gap,
The main advantage of trading using opposite Century Aluminum and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Gap, vs. Mesa Air Group | Gap, vs. Southwest Airlines | Gap, vs. Brenmiller Energy Ltd | Gap, vs. Delta Air Lines |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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