Correlation Between Globalfoundries and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Globalfoundries and Century 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 Globalfoundries and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and Century Aluminum, you can compare the effects of market volatilities on Globalfoundries and Century 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 Globalfoundries with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Century Aluminum.
Diversification Opportunities for Globalfoundries and Century Aluminum
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globalfoundries and Century is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Globalfoundries 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 Globalfoundries are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Globalfoundries i.e., Globalfoundries and Century Aluminum go up and down completely randomly.
Pair Corralation between Globalfoundries and Century Aluminum
Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Century Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.41 times less risky than Century Aluminum. The stock trades about -0.01 of its potential returns per unit of risk. The Century Aluminum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,771 in Century Aluminum on September 1, 2024 and sell it today you would earn a total of 512.00 from holding Century Aluminum or generate 28.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. Century Aluminum
Performance |
| Timeline |
| Globalfoundries |
| Century Aluminum |
Globalfoundries and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and Century Aluminum
The main advantage of trading using opposite Globalfoundries and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, Century 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| Century Aluminum vs. Fortitude Gold Corp | Century Aluminum vs. New Gold | Century Aluminum vs. Galiano Gold | Century Aluminum vs. GoldMining |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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