Correlation Between Kaiser Aluminum and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Minerals Technologies 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 Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Minerals Technologies, you can compare the effects of market volatilities on Kaiser Aluminum and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Minerals Technologies.
Diversification Opportunities for Kaiser Aluminum and Minerals Technologies
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and Minerals is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Minerals Technologies go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Minerals Technologies
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.05 times more return on investment than Minerals Technologies. However, Kaiser Aluminum is 1.05 times more volatile than Minerals Technologies. It trades about 0.18 of its potential returns per unit of risk. Minerals Technologies 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. Minerals Technologies
Performance |
| Timeline |
| Kaiser Aluminum |
| Minerals Technologies |
Kaiser Aluminum and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Minerals Technologies
The main advantage of trading using opposite Kaiser Aluminum and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Minerals Technologies vs. Linde plc Ordinary | Minerals Technologies vs. Air Products and | Minerals Technologies vs. Aquagold International | Minerals Technologies vs. Thrivent High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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