Correlation Between Kaiser Aluminum and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Grocery Outlet Holding, you can compare the effects of market volatilities on Kaiser Aluminum and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Grocery Outlet.
Diversification Opportunities for Kaiser Aluminum and Grocery Outlet
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kaiser and Grocery is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Grocery Outlet go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Grocery Outlet
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.02 times more return on investment than Grocery Outlet. However, Kaiser Aluminum is 1.02 times more volatile than Grocery Outlet Holding. It trades about 0.05 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.03 per unit of risk. If you would invest 5,799 in Kaiser Aluminum on August 26, 2024 and sell it today you would earn a total of 2,366 from holding Kaiser Aluminum or generate 40.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Grocery Outlet Holding
Performance |
| Timeline |
| Kaiser Aluminum |
| Grocery Outlet Holding |
Kaiser Aluminum and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Grocery Outlet
The main advantage of trading using opposite Kaiser Aluminum and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Grocery Outlet vs. Hf Foods Group | Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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