Correlation Between Century Aluminum and International Tower
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and International Tower 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 International Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and International Tower Hill, you can compare the effects of market volatilities on Century Aluminum and International Tower 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 International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and International Tower.
Diversification Opportunities for Century Aluminum and International Tower
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and International is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill 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 International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Century Aluminum i.e., Century Aluminum and International Tower go up and down completely randomly.
Pair Corralation between Century Aluminum and International Tower
Given the investment horizon of 90 days Century Aluminum is expected to generate 0.73 times more return on investment than International Tower. However, Century Aluminum is 1.36 times less risky than International Tower. It trades about 0.25 of its potential returns per unit of risk. International Tower Hill is currently generating about -0.02 per unit of risk. If you would invest 1,589 in Century Aluminum on September 5, 2024 and sell it today you would earn a total of 787.00 from holding Century Aluminum or generate 49.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. International Tower Hill
Performance |
| Timeline |
| Century Aluminum |
| International Tower Hill |
Century Aluminum and International Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and International Tower
The main advantage of trading using opposite Century Aluminum and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, International Tower 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 International Tower will offset losses from the drop in International Tower's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| International Tower vs. Constellium Nv | International Tower vs. Century Aluminum | International Tower vs. China Hongqiao Group | International Tower vs. Kaiser Aluminum |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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