Correlation Between Kaiser Aluminum and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and BRIT AMER 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 BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Kaiser Aluminum and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and BRIT AMER.
Diversification Opportunities for Kaiser Aluminum and BRIT AMER
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaiser and BRIT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and BRIT AMER go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and BRIT AMER
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 2.35 times more return on investment than BRIT AMER. However, Kaiser Aluminum is 2.35 times more volatile than BRIT AMER TOBACCO. It trades about 0.01 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.02 per unit of risk. If you would invest 6,721 in Kaiser Aluminum on September 26, 2024 and sell it today you would lose (71.00) from holding Kaiser Aluminum or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Kaiser Aluminum |
| BRIT AMER TOBACCO |
Kaiser Aluminum and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and BRIT AMER
The main advantage of trading using opposite Kaiser Aluminum and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Kaiser Aluminum vs. Fair Isaac Corp | Kaiser Aluminum vs. Zurich Insurance Group | Kaiser Aluminum vs. Air New Zealand | Kaiser Aluminum vs. HANOVER INSURANCE |
| BRIT AMER vs. DISTRICT METALS | BRIT AMER vs. Focus Home Interactive | BRIT AMER vs. Autohome ADR | BRIT AMER vs. Kaiser Aluminum |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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