Correlation Between Kaiser Aluminum and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Kaiser Aluminum and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and CDN IMPERIAL.
Diversification Opportunities for Kaiser Aluminum and CDN IMPERIAL
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and CDN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and CDN IMPERIAL
Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the CDN IMPERIAL. In addition to that, Kaiser Aluminum is 1.68 times more volatile than CDN IMPERIAL BANK. It trades about -0.4 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.06 per unit of volatility. If you would invest 5,269 in CDN IMPERIAL BANK on January 5, 2025 and sell it today you would lose (129.00) from holding CDN IMPERIAL BANK or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaiser Aluminum vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Kaiser Aluminum |
| CDN IMPERIAL BANK |
Kaiser Aluminum and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and CDN IMPERIAL
The main advantage of trading using opposite Kaiser Aluminum and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Kaiser Aluminum vs. Norsk Hydro ASA | Kaiser Aluminum vs. Norsk Hydro ASA | Kaiser Aluminum vs. Alcoa Corp | Kaiser Aluminum vs. AMAG Austria Metall |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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