Correlation Between Kaiser Aluminum and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Talanx AG 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 Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Talanx AG, you can compare the effects of market volatilities on Kaiser Aluminum and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Talanx AG.
Diversification Opportunities for Kaiser Aluminum and Talanx AG
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kaiser and Talanx is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Talanx AG go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Talanx AG
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.9 times more return on investment than Talanx AG. However, Kaiser Aluminum is 1.9 times more volatile than Talanx AG. It trades about 0.06 of its potential returns per unit of risk. Talanx AG is currently generating about 0.07 per unit of risk. If you would invest 5,319 in Kaiser Aluminum on September 4, 2024 and sell it today you would earn a total of 2,131 from holding Kaiser Aluminum or generate 40.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kaiser Aluminum vs. Talanx AG
Performance |
| Timeline |
| Kaiser Aluminum |
| Talanx AG |
Kaiser Aluminum and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Talanx AG
The main advantage of trading using opposite Kaiser Aluminum and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Kaiser Aluminum vs. Silicon Motion Technology | Kaiser Aluminum vs. PTT Global Chemical | Kaiser Aluminum vs. Brockhaus Capital Management | Kaiser Aluminum vs. SEKISUI CHEMICAL |
| Talanx AG vs. BJs Wholesale Club | Talanx AG vs. American Eagle Outfitters | Talanx AG vs. AEON STORES | Talanx AG vs. URBAN OUTFITTERS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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