Correlation Between Kaiser Aluminum and Air Lease
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Air Lease, you can compare the effects of market volatilities on Kaiser Aluminum and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Air Lease.
Diversification Opportunities for Kaiser Aluminum and Air Lease
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and Air is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Air Lease go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Air Lease
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 2.29 times more return on investment than Air Lease. However, Kaiser Aluminum is 2.29 times more volatile than Air Lease. It trades about 0.15 of its potential returns per unit of risk. Air Lease is currently generating about 0.29 per unit of risk. If you would invest 6,519 in Kaiser Aluminum on August 24, 2024 and sell it today you would earn a total of 831.00 from holding Kaiser Aluminum or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaiser Aluminum vs. Air Lease
Performance |
| Timeline |
| Kaiser Aluminum |
| Air Lease |
Kaiser Aluminum and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Air Lease
The main advantage of trading using opposite Kaiser Aluminum and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Kaiser Aluminum vs. TEXAS ROADHOUSE | Kaiser Aluminum vs. Air Lease | Kaiser Aluminum vs. Lion One Metals | Kaiser Aluminum vs. Gaztransport Technigaz SA |
| Air Lease vs. United Rentals | Air Lease vs. WillScot Mobile Mini | Air Lease vs. Superior Plus Corp | Air Lease vs. NMI Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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