Correlation Between Kaiser Aluminum and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Dow Jones Industrial, you can compare the effects of market volatilities on Kaiser Aluminum and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Dow Jones.
Diversification Opportunities for Kaiser Aluminum and Dow Jones
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and Dow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Dow Jones go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Dow Jones
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 3.86 times more return on investment than Dow Jones. However, Kaiser Aluminum is 3.86 times more volatile than Dow Jones Industrial. It trades about 0.03 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 6,223 in Kaiser Aluminum on August 28, 2024 and sell it today you would earn a total of 1,277 from holding Kaiser Aluminum or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.88% |
| Values | Daily Returns |
Kaiser Aluminum vs. Dow Jones Industrial
Performance |
| Timeline |
Kaiser Aluminum and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Kaiser Aluminum
Pair trading matchups for Kaiser Aluminum
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Kaiser Aluminum and Dow Jones
The main advantage of trading using opposite Kaiser Aluminum and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.The idea behind Kaiser Aluminum and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |