Correlation Between Century Aluminum and SkyWest
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and SkyWest 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 SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and SkyWest, you can compare the effects of market volatilities on Century Aluminum and SkyWest 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 SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and SkyWest.
Diversification Opportunities for Century Aluminum and SkyWest
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Century and SkyWest is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest 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 SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of Century Aluminum i.e., Century Aluminum and SkyWest go up and down completely randomly.
Pair Corralation between Century Aluminum and SkyWest
Given the investment horizon of 90 days Century Aluminum is expected to under-perform the SkyWest. In addition to that, Century Aluminum is 1.44 times more volatile than SkyWest. It trades about -0.43 of its total potential returns per unit of risk. SkyWest is currently generating about -0.34 per unit of volatility. If you would invest 11,419 in SkyWest on September 24, 2024 and sell it today you would lose (1,380) from holding SkyWest or give up 12.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Century Aluminum vs. SkyWest
Performance |
Timeline |
Century Aluminum |
SkyWest |
Century Aluminum and SkyWest Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Century Aluminum and SkyWest
The main advantage of trading using opposite Century Aluminum and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, SkyWest 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 SkyWest will offset losses from the drop in SkyWest's long position.Century Aluminum vs. Wheaton Precious Metals | ||
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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