Correlation Between Kaiser Aluminum and WT Offshore
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and WT Offshore 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 WT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and WT Offshore, you can compare the effects of market volatilities on Kaiser Aluminum and WT Offshore 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 WT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and WT Offshore.
Diversification Opportunities for Kaiser Aluminum and WT Offshore
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kaiser and WTI is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and WT Offshore go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and WT Offshore
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.84 times more return on investment than WT Offshore. However, Kaiser Aluminum is 1.2 times less risky than WT Offshore. It trades about 0.01 of its potential returns per unit of risk. WT Offshore is currently generating about -0.06 per unit of risk. If you would invest 8,131 in Kaiser Aluminum on September 3, 2024 and sell it today you would lose (3.00) from holding Kaiser Aluminum or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. WT Offshore
Performance |
| Timeline |
| Kaiser Aluminum |
| WT Offshore |
Kaiser Aluminum and WT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and WT Offshore
The main advantage of trading using opposite Kaiser Aluminum and WT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, WT Offshore 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 WT Offshore will offset losses from the drop in WT Offshore's long position.| Kaiser Aluminum vs. SPACE | Kaiser Aluminum vs. Ampleforth | Kaiser Aluminum vs. ionet | Kaiser Aluminum vs. Memecoin |
| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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