Correlation Between Kaiser Aluminum and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Teck Resources 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 Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Teck Resources Ltd, you can compare the effects of market volatilities on Kaiser Aluminum and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Teck Resources.
Diversification Opportunities for Kaiser Aluminum and Teck Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kaiser and Teck is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Teck Resources go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Teck Resources
Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the Teck Resources. In addition to that, Kaiser Aluminum is 1.19 times more volatile than Teck Resources Ltd. It trades about -0.12 of its total potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.03 per unit of volatility. If you would invest 4,340 in Teck Resources Ltd on September 13, 2024 and sell it today you would earn a total of 36.00 from holding Teck Resources Ltd or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Teck Resources Ltd
Performance |
| Timeline |
| Kaiser Aluminum |
| Teck Resources |
Kaiser Aluminum and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Teck Resources
The main advantage of trading using opposite Kaiser Aluminum and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' 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 |
| Teck Resources vs. Columbia Sportswear | Teck Resources vs. Ming Le Sports | Teck Resources vs. ScanSource | Teck Resources vs. Fevertree Drinks PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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