Correlation Between Kaiser Aluminum and National Beverage
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and National Beverage Corp, you can compare the effects of market volatilities on Kaiser Aluminum and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and National Beverage.
Diversification Opportunities for Kaiser Aluminum and National Beverage
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and National is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and National Beverage go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and National Beverage
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 2.18 times more return on investment than National Beverage. However, Kaiser Aluminum is 2.18 times more volatile than National Beverage Corp. It trades about 0.23 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.2 per unit of risk. If you would invest 6,300 in Kaiser Aluminum on August 27, 2024 and sell it today you would earn a total of 1,200 from holding Kaiser Aluminum or generate 19.05% 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. National Beverage Corp
Performance |
| Timeline |
| Kaiser Aluminum |
| National Beverage Corp |
Kaiser Aluminum and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and National Beverage
The main advantage of trading using opposite Kaiser Aluminum and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Kaiser Aluminum vs. Zoom Video Communications | Kaiser Aluminum vs. Internet Thailand PCL | Kaiser Aluminum vs. JAPAN AIRLINES | Kaiser Aluminum vs. Singapore Telecommunications Limited |
| National Beverage vs. FIREWEED METALS P | National Beverage vs. Kaiser Aluminum | National Beverage vs. PennyMac Mortgage Investment | National Beverage vs. Chuangs China Investments |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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