Correlation Between ALERION CLEANPOWER and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER 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 ALERION CLEANPOWER and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALERION CLEANPOWER and Kaiser Aluminum, you can compare the effects of market volatilities on ALERION CLEANPOWER 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 ALERION CLEANPOWER with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and Kaiser Aluminum.
Diversification Opportunities for ALERION CLEANPOWER and Kaiser Aluminum
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALERION and Kaiser is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between ALERION CLEANPOWER and Kaiser Aluminum
Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to generate 8.13 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, ALERION CLEANPOWER is 1.19 times less risky than Kaiser Aluminum. It trades about 0.03 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 6,300 in Kaiser Aluminum on August 28, 2024 and sell it today you would earn a total of 1,200 from holding Kaiser Aluminum or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALERION CLEANPOWER vs. Kaiser Aluminum
Performance |
| Timeline |
| ALERION CLEANPOWER |
| Kaiser Aluminum |
ALERION CLEANPOWER and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALERION CLEANPOWER and Kaiser Aluminum
The main advantage of trading using opposite ALERION CLEANPOWER and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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.| ALERION CLEANPOWER vs. Lyxor 1 | ALERION CLEANPOWER vs. Xtrackers LevDAX | ALERION CLEANPOWER vs. Xtrackers ShortDAX |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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