Correlation Between Kaiser Aluminum and PPL
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and PPL 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 PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and PPL Corporation, you can compare the effects of market volatilities on Kaiser Aluminum and PPL 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 PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and PPL.
Diversification Opportunities for Kaiser Aluminum and PPL
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kaiser and PPL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation 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 PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and PPL go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and PPL
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.15 times less return on investment than PPL. In addition to that, Kaiser Aluminum is 2.05 times more volatile than PPL Corporation. It trades about 0.11 of its total potential returns per unit of risk. PPL Corporation is currently generating about 0.26 per unit of volatility. If you would invest 3,011 in PPL Corporation on August 30, 2024 and sell it today you would earn a total of 281.00 from holding PPL Corporation or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. PPL Corp.
Performance |
| Timeline |
| Kaiser Aluminum |
| PPL Corporation |
Kaiser Aluminum and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and PPL
The main advantage of trading using opposite Kaiser Aluminum and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| Kaiser Aluminum vs. SOFTBANK P ADR | Kaiser Aluminum vs. Commonwealth Bank of | Kaiser Aluminum vs. PKSHA TECHNOLOGY INC | Kaiser Aluminum vs. COMINTL BANK ADR1 |
| PPL vs. Magnachip Semiconductor | PPL vs. Meli Hotels International | PPL vs. NXP Semiconductors NV | PPL vs. NH HOTEL GROUP |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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