Correlation Between Kaiser Aluminum and Meta Platforms
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By analyzing existing cross correlation between Kaiser Aluminum and Meta Platforms, you can compare the effects of market volatilities on Kaiser Aluminum and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Meta Platforms.
Diversification Opportunities for Kaiser Aluminum and Meta Platforms
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and Meta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Meta Platforms go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Meta Platforms
Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the Meta Platforms. In addition to that, Kaiser Aluminum is 1.64 times more volatile than Meta Platforms. It trades about -0.03 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.1 per unit of volatility. If you would invest 43,842 in Meta Platforms on September 1, 2024 and sell it today you would earn a total of 10,858 from holding Meta Platforms or generate 24.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Kaiser Aluminum vs. Meta Platforms
Performance |
| Timeline |
| Kaiser Aluminum |
| Meta Platforms |
Kaiser Aluminum and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Meta Platforms
The main advantage of trading using opposite Kaiser Aluminum and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.The idea behind Kaiser Aluminum and Meta Platforms 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.| Meta Platforms vs. Datadog | Meta Platforms vs. Compugroup Medical SE | Meta Platforms vs. AVITA Medical | Meta Platforms vs. Avanos Medical |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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