Correlation Between Ladder Capital and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Ladder Capital and Kaiser Aluminum 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 Ladder Capital and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladder Capital Corp and Kaiser Aluminum, you can compare the effects of market volatilities on Ladder Capital and Kaiser Aluminum 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 Ladder Capital with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and Kaiser Aluminum.
Diversification Opportunities for Ladder Capital and Kaiser Aluminum
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ladder and Kaiser is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Ladder Capital 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 Ladder Capital Corp are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Ladder Capital i.e., Ladder Capital and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Ladder Capital and Kaiser Aluminum
Assuming the 90 days trading horizon Ladder Capital Corp is expected to generate 0.85 times more return on investment than Kaiser Aluminum. However, Ladder Capital Corp is 1.17 times less risky than Kaiser Aluminum. It trades about -0.15 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.21 per unit of risk. If you would invest 1,105 in Ladder Capital Corp on October 13, 2024 and sell it today you would lose (45.00) from holding Ladder Capital Corp or give up 4.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ladder Capital Corp vs. Kaiser Aluminum
Performance |
| Timeline |
| Ladder Capital Corp |
| Kaiser Aluminum |
Ladder Capital and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladder Capital and Kaiser Aluminum
The main advantage of trading using opposite Ladder Capital and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladder Capital position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Ladder Capital vs. InPlay Oil Corp | Ladder Capital vs. Casio Computer CoLtd | Ladder Capital vs. COLUMBIA SPORTSWEAR | Ladder Capital vs. MACOM Technology Solutions |
| Kaiser Aluminum vs. PARKEN Sport Entertainment | Kaiser Aluminum vs. Yuexiu Transport Infrastructure | Kaiser Aluminum vs. AM EAGLE OUTFITTERS | Kaiser Aluminum vs. SPORT LISBOA E |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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