Correlation Between DISTRICT METALS and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS and Kaiser Aluminum 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 DISTRICT METALS and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DISTRICT METALS and Kaiser Aluminum, you can compare the effects of market volatilities on DISTRICT METALS and Kaiser Aluminum 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 DISTRICT METALS with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and Kaiser Aluminum.
Diversification Opportunities for DISTRICT METALS and Kaiser Aluminum
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DISTRICT and Kaiser is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and DISTRICT METALS 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 DISTRICT METALS are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of DISTRICT METALS i.e., DISTRICT METALS and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between DISTRICT METALS and Kaiser Aluminum
Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 2.15 times more return on investment than Kaiser Aluminum. However, DISTRICT METALS is 2.15 times more volatile than Kaiser Aluminum. It trades about 0.07 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.05 per unit of risk. If you would invest 17.00 in DISTRICT METALS on December 4, 2024 and sell it today you would earn a total of 5.00 from holding DISTRICT METALS or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
DISTRICT METALS vs. Kaiser Aluminum
Performance |
| Timeline |
| DISTRICT METALS |
| Kaiser Aluminum |
DISTRICT METALS and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DISTRICT METALS and Kaiser Aluminum
The main advantage of trading using opposite DISTRICT METALS and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| DISTRICT METALS vs. TOREX SEMICONDUCTOR LTD | DISTRICT METALS vs. Transport International Holdings | DISTRICT METALS vs. SOEDER SPORTFISKE AB | DISTRICT METALS vs. DICKS Sporting Goods |
| Kaiser Aluminum vs. JD SPORTS FASH | Kaiser Aluminum vs. SPORT LISBOA E | Kaiser Aluminum vs. Yuexiu Transport Infrastructure | Kaiser Aluminum vs. BII Railway Transportation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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