Correlation Between Kaiser Aluminum and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Arrow Electronics 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 Kaiser Aluminum and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Arrow Electronics, you can compare the effects of market volatilities on Kaiser Aluminum and Arrow Electronics 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 Kaiser Aluminum with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Arrow Electronics.
Diversification Opportunities for Kaiser Aluminum and Arrow Electronics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kaiser and Arrow is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Kaiser Aluminum 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 Kaiser Aluminum are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Arrow Electronics go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Arrow Electronics
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.22 times more return on investment than Arrow Electronics. However, Kaiser Aluminum is 1.22 times more volatile than Arrow Electronics. It trades about 0.11 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.04 per unit of risk. If you would invest 6,958 in Kaiser Aluminum on September 2, 2024 and sell it today you would earn a total of 1,170 from holding Kaiser Aluminum or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Arrow Electronics
Performance |
| Timeline |
| Kaiser Aluminum |
| Arrow Electronics |
Kaiser Aluminum and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Arrow Electronics
The main advantage of trading using opposite Kaiser Aluminum and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Arrow Electronics vs. Avnet Inc | Arrow Electronics vs. Synnex | Arrow Electronics vs. Ingram Micro Holding | Arrow Electronics vs. Insight Enterprises |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |