Correlation Between Century Aluminum and Western Asset
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Western Asset Investment, you can compare the effects of market volatilities on Century Aluminum and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Western Asset.
Diversification Opportunities for Century Aluminum and Western Asset
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Western is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Century Aluminum i.e., Century Aluminum and Western Asset go up and down completely randomly.
Pair Corralation between Century Aluminum and Western Asset
Given the investment horizon of 90 days Century Aluminum is expected to generate 10.17 times more return on investment than Western Asset. However, Century Aluminum is 10.17 times more volatile than Western Asset Investment. It trades about 0.25 of its potential returns per unit of risk. Western Asset Investment is currently generating about -0.02 per unit of risk. If you would invest 1,781 in Century Aluminum on August 30, 2024 and sell it today you would earn a total of 523.00 from holding Century Aluminum or generate 29.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Century Aluminum vs. Western Asset Investment
Performance |
| Timeline |
| Century Aluminum |
| Western Asset Investment |
Century Aluminum and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Western Asset
The main advantage of trading using opposite Century Aluminum and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Western Asset vs. ClimateRock Class A | Western Asset vs. CF Acquisition VII | Western Asset vs. DP Cap Acquisition |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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