Correlation Between Kaiser Aluminum and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and ServiceNow 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 ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and ServiceNow, you can compare the effects of market volatilities on Kaiser Aluminum and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and ServiceNow.
Diversification Opportunities for Kaiser Aluminum and ServiceNow
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and ServiceNow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and ServiceNow go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and ServiceNow
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.35 times less return on investment than ServiceNow. In addition to that, Kaiser Aluminum is 1.53 times more volatile than ServiceNow. It trades about 0.11 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.22 per unit of volatility. If you would invest 83,586 in ServiceNow on September 2, 2024 and sell it today you would earn a total of 21,358 from holding ServiceNow or generate 25.55% 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. ServiceNow
Performance |
| Timeline |
| Kaiser Aluminum |
| ServiceNow |
Kaiser Aluminum and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and ServiceNow
The main advantage of trading using opposite Kaiser Aluminum and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| ServiceNow vs. Datadog | ServiceNow vs. Gitlab Inc | ServiceNow vs. Atlassian Corp Plc | ServiceNow vs. HubSpot |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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