Correlation Between Kaiser Aluminum and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and X-FAB Silicon 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 X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and X FAB Silicon Foundries, you can compare the effects of market volatilities on Kaiser Aluminum and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and X-FAB Silicon.
Diversification Opportunities for Kaiser Aluminum and X-FAB Silicon
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kaiser and X-FAB is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and X-FAB Silicon
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.75 times more return on investment than X-FAB Silicon. However, Kaiser Aluminum is 1.34 times less risky than X-FAB Silicon. It trades about 0.06 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.0 per unit of risk. If you would invest 6,834 in Kaiser Aluminum on October 25, 2024 and sell it today you would earn a total of 489.00 from holding Kaiser Aluminum or generate 7.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Kaiser Aluminum vs. X FAB Silicon Foundries
Performance |
Timeline |
Kaiser Aluminum |
X FAB Silicon |
Kaiser Aluminum and X-FAB Silicon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kaiser Aluminum and X-FAB Silicon
The main advantage of trading using opposite Kaiser Aluminum and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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