Correlation Between GMO Internet and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Kaiser Aluminum, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Kaiser Aluminum.
Diversification Opportunities for GMO Internet and Kaiser Aluminum
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMO and Kaiser is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between GMO Internet and Kaiser Aluminum
Assuming the 90 days horizon GMO Internet is expected to generate 0.85 times more return on investment than Kaiser Aluminum. However, GMO Internet is 1.18 times less risky than Kaiser Aluminum. It trades about 0.2 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.02 per unit of risk. If you would invest 1,590 in GMO Internet on November 6, 2024 and sell it today you would earn a total of 90.00 from holding GMO Internet or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Kaiser Aluminum
Performance |
| Timeline |
| GMO Internet |
| Kaiser Aluminum |
GMO Internet and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Kaiser Aluminum
The main advantage of trading using opposite GMO Internet and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Lamar Advertising | GMO Internet vs. PACIFIC ONLINE | GMO Internet vs. CarsalesCom | GMO Internet vs. SALESFORCE INC CDR |
| Kaiser Aluminum vs. G III APPAREL GROUP | Kaiser Aluminum vs. USWE SPORTS AB | Kaiser Aluminum vs. Yuexiu Transport Infrastructure | Kaiser Aluminum vs. TITANIUM TRANSPORTGROUP |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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