Correlation Between Century Aluminum and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and NYSE Composite 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 NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and NYSE Composite, you can compare the effects of market volatilities on Century Aluminum and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and NYSE Composite.
Diversification Opportunities for Century Aluminum and NYSE Composite
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and NYSE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Century Aluminum i.e., Century Aluminum and NYSE Composite go up and down completely randomly.
Pair Corralation between Century Aluminum and NYSE Composite
Given the investment horizon of 90 days Century Aluminum is expected to under-perform the NYSE Composite. In addition to that, Century Aluminum is 3.8 times more volatile than NYSE Composite. It trades about -0.36 of its total potential returns per unit of risk. NYSE Composite is currently generating about -0.29 per unit of volatility. If you would invest 1,996,830 in NYSE Composite on September 22, 2024 and sell it today you would lose (84,886) from holding NYSE Composite or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. NYSE Composite
Performance |
| Timeline |
Century Aluminum and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Century Aluminum
Pair trading matchups for Century Aluminum
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Century Aluminum and NYSE Composite
The main advantage of trading using opposite Century Aluminum and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.The idea behind Century Aluminum and NYSE Composite pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NYSE Composite vs. Sweetgreen | NYSE Composite vs. Siriuspoint | NYSE Composite vs. Park Hotels Resorts | NYSE Composite vs. Kura Sushi USA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |