Correlation Between Kaiser Aluminum and IB Acquisition
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and IB Acquisition 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 IB Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and IB Acquisition Corp, you can compare the effects of market volatilities on Kaiser Aluminum and IB Acquisition 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 IB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and IB Acquisition.
Diversification Opportunities for Kaiser Aluminum and IB Acquisition
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kaiser and IBACR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition Corp 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 IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and IB Acquisition go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and IB Acquisition
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 19.81 times less return on investment than IB Acquisition. But when comparing it to its historical volatility, Kaiser Aluminum is 17.68 times less risky than IB Acquisition. It trades about 0.05 of its potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.49 in IB Acquisition Corp on October 25, 2024 and sell it today you would lose (0.48) from holding IB Acquisition Corp or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Kaiser Aluminum vs. IB Acquisition Corp
Performance |
| Timeline |
| Kaiser Aluminum |
| IB Acquisition Corp |
Kaiser Aluminum and IB Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and IB Acquisition
The main advantage of trading using opposite Kaiser Aluminum and IB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, IB Acquisition 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 IB Acquisition will offset losses from the drop in IB Acquisition's long position.| Kaiser Aluminum vs. Bank of America | Kaiser Aluminum vs. RLJ Lodging Trust | Kaiser Aluminum vs. PennyMac Finl Svcs | Kaiser Aluminum vs. Brandywine Realty Trust |
| IB Acquisition vs. Mesa Air Group | IB Acquisition vs. The Mosaic | IB Acquisition vs. NL Industries | IB Acquisition vs. International Consolidated Airlines |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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