Correlation Between Kaiser Aluminum and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and ENDESA ADR 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 ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and ENDESA ADR 12, you can compare the effects of market volatilities on Kaiser Aluminum and ENDESA ADR 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 ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and ENDESA ADR.
Diversification Opportunities for Kaiser Aluminum and ENDESA ADR
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kaiser and ENDESA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 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 ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and ENDESA ADR go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and ENDESA ADR
Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the ENDESA ADR. In addition to that, Kaiser Aluminum is 2.19 times more volatile than ENDESA ADR 12. It trades about -0.16 of its total potential returns per unit of risk. ENDESA ADR 12 is currently generating about 0.25 per unit of volatility. If you would invest 925.00 in ENDESA ADR 12 on September 13, 2024 and sell it today you would earn a total of 60.00 from holding ENDESA ADR 12 or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaiser Aluminum vs. ENDESA ADR 12
Performance |
| Timeline |
| Kaiser Aluminum |
| ENDESA ADR 12 |
Kaiser Aluminum and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and ENDESA ADR
The main advantage of trading using opposite Kaiser Aluminum and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, ENDESA ADR 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 ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.| Kaiser Aluminum vs. Norsk Hydro ASA | Kaiser Aluminum vs. Aluminum of | Kaiser Aluminum vs. Superior Plus Corp | Kaiser Aluminum vs. SIVERS SEMICONDUCTORS AB |
| ENDESA ADR vs. Duke Energy | ENDESA ADR vs. WEC Energy Group | ENDESA ADR vs. CMS Energy | ENDESA ADR vs. Terna Rete |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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