Correlation Between Kaiser Aluminum and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Jacquet Metal 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 Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Jacquet Metal Service, you can compare the effects of market volatilities on Kaiser Aluminum and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Jacquet Metal.
Diversification Opportunities for Kaiser Aluminum and Jacquet Metal
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kaiser and Jacquet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Jacquet Metal go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Jacquet Metal
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 3.2 times more return on investment than Jacquet Metal. However, Kaiser Aluminum is 3.2 times more volatile than Jacquet Metal Service. It trades about 0.15 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.13 per unit of risk. If you would invest 6,519 in Kaiser Aluminum on August 24, 2024 and sell it today you would earn a total of 831.00 from holding Kaiser Aluminum or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kaiser Aluminum vs. Jacquet Metal Service
Performance |
| Timeline |
| Kaiser Aluminum |
| Jacquet Metal Service |
Kaiser Aluminum and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Jacquet Metal
The main advantage of trading using opposite Kaiser Aluminum and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Kaiser Aluminum vs. TEXAS ROADHOUSE | Kaiser Aluminum vs. Air Lease | Kaiser Aluminum vs. Lion One Metals | Kaiser Aluminum vs. Gaztransport Technigaz SA |
| Jacquet Metal vs. ArcelorMittal SA | Jacquet Metal vs. ArcelorMittal | Jacquet Metal vs. Nippon Steel | Jacquet Metal vs. NIPPON STEEL SPADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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