Correlation Between Kaiser Aluminum and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and CarsalesCom 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 CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and CarsalesCom, you can compare the effects of market volatilities on Kaiser Aluminum and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and CarsalesCom.
Diversification Opportunities for Kaiser Aluminum and CarsalesCom
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and CarsalesCom is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and CarsalesCom go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and CarsalesCom
Assuming the 90 days trading horizon Kaiser Aluminum is expected to generate 1.44 times less return on investment than CarsalesCom. In addition to that, Kaiser Aluminum is 2.61 times more volatile than CarsalesCom. It trades about 0.14 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.54 per unit of volatility. If you would invest 2,200 in CarsalesCom on September 2, 2024 and sell it today you would earn a total of 340.00 from holding CarsalesCom or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. CarsalesCom
Performance |
| Timeline |
| Kaiser Aluminum |
| CarsalesCom |
Kaiser Aluminum and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and CarsalesCom
The main advantage of trading using opposite Kaiser Aluminum and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.The idea behind Kaiser Aluminum and CarsalesCom 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.| CarsalesCom vs. URBAN OUTFITTERS | CarsalesCom vs. AM EAGLE OUTFITTERS | CarsalesCom vs. ADRIATIC METALS LS 013355 | CarsalesCom vs. MEDICAL FACILITIES NEW |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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