Correlation Between Kaiser Aluminum and Delek Drilling
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Delek Drilling 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 Delek Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Delek Drilling , you can compare the effects of market volatilities on Kaiser Aluminum and Delek Drilling 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 Delek Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Delek Drilling.
Diversification Opportunities for Kaiser Aluminum and Delek Drilling
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and Delek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling 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 Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Delek Drilling go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Delek Drilling
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.86 times more return on investment than Delek Drilling. However, Kaiser Aluminum is 1.86 times more volatile than Delek Drilling . It trades about 0.18 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.17 per unit of risk. If you would invest 7,426 in Kaiser Aluminum on September 1, 2024 and sell it today you would earn a total of 702.00 from holding Kaiser Aluminum or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Delek Drilling
Performance |
| Timeline |
| Kaiser Aluminum |
| Delek Drilling |
Kaiser Aluminum and Delek Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Delek Drilling
The main advantage of trading using opposite Kaiser Aluminum and Delek Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Delek Drilling 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 Delek Drilling will offset losses from the drop in Delek Drilling's long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Delek Drilling vs. Permian Resources | Delek Drilling vs. Devon Energy | Delek Drilling vs. EOG Resources | Delek Drilling vs. Coterra Energy |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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