Correlation Between Western Asset and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Kaiser Aluminum, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Kaiser Aluminum.
Diversification Opportunities for Western Asset and Kaiser Aluminum
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Kaiser is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Western Asset and Kaiser Aluminum
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 6.45 times less risky than Kaiser Aluminum. The stock trades about -0.05 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,678 in Kaiser Aluminum on August 24, 2024 and sell it today you would earn a total of 1,611 from holding Kaiser Aluminum or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset Investment vs. Kaiser Aluminum
Performance |
| Timeline |
| Western Asset Investment |
| Kaiser Aluminum |
Western Asset and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Kaiser Aluminum
The main advantage of trading using opposite Western Asset and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| Kaiser Aluminum vs. Eshallgo Class A | Kaiser Aluminum vs. Amtech Systems | Kaiser Aluminum vs. Gold Fields Ltd | Kaiser Aluminum vs. Aegean Airlines SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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