Correlation Between Kaiser Aluminum and American Homes
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and American Homes 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 American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and American Homes 4, you can compare the effects of market volatilities on Kaiser Aluminum and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and American Homes.
Diversification Opportunities for Kaiser Aluminum and American Homes
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaiser and American is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and American Homes go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and American Homes
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.18 times less return on investment than American Homes. In addition to that, Kaiser Aluminum is 1.55 times more volatile than American Homes 4. It trades about 0.02 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.03 per unit of volatility. If you would invest 2,773 in American Homes 4 on November 19, 2024 and sell it today you would earn a total of 587.00 from holding American Homes 4 or generate 21.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. American Homes 4
Performance |
| Timeline |
| Kaiser Aluminum |
| American Homes 4 |
Kaiser Aluminum and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and American Homes
The main advantage of trading using opposite Kaiser Aluminum and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Kaiser Aluminum vs. COMMERCIAL VEHICLE | Kaiser Aluminum vs. National Retail Properties | Kaiser Aluminum vs. Cars Inc | Kaiser Aluminum vs. GRUPO CARSO A1 |
| American Homes vs. STORE ELECTRONIC | American Homes vs. Japan Tobacco | American Homes vs. Renesas Electronics | American Homes vs. Arrow Electronics |
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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