Correlation Between Kaiser Aluminum and Western Asset
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Western Asset Investment, you can compare the effects of market volatilities on Kaiser Aluminum and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Western Asset.
Diversification Opportunities for Kaiser Aluminum and Western Asset
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kaiser and Western is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Western Asset go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Western Asset
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 5.09 times more return on investment than Western Asset. However, Kaiser Aluminum is 5.09 times more volatile than Western Asset Investment. It trades about 0.19 of its potential returns per unit of risk. Western Asset Investment is currently generating about -0.1 per unit of risk. If you would invest 7,607 in Kaiser Aluminum on August 27, 2024 and sell it today you would earn a total of 771.00 from holding Kaiser Aluminum or generate 10.14% 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. Western Asset Investment
Performance |
| Timeline |
| Kaiser Aluminum |
| Western Asset Investment |
Kaiser Aluminum and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Western Asset
The main advantage of trading using opposite Kaiser Aluminum and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Stocks Directory module to find actively traded stocks across global markets.
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