Correlation Between M3 Brigade and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both M3 Brigade 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 M3 Brigade and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Brigade Acquisition V and Kaiser Aluminum, you can compare the effects of market volatilities on M3 Brigade 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 M3 Brigade with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Brigade and Kaiser Aluminum.
Diversification Opportunities for M3 Brigade and Kaiser Aluminum
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MBAV and Kaiser is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding M3 Brigade Acquisition V and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and M3 Brigade 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 M3 Brigade Acquisition V 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 M3 Brigade i.e., M3 Brigade and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between M3 Brigade and Kaiser Aluminum
Given the investment horizon of 90 days M3 Brigade is expected to generate 25.34 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, M3 Brigade Acquisition V is 28.83 times less risky than Kaiser Aluminum. It trades about 0.12 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,813 in Kaiser Aluminum on September 12, 2024 and sell it today you would earn a total of 1,111 from holding Kaiser Aluminum or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
M3 Brigade Acquisition V vs. Kaiser Aluminum
Performance |
| Timeline |
| M3 Brigade Acquisition |
| Kaiser Aluminum |
M3 Brigade and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Brigade and Kaiser Aluminum
The main advantage of trading using opposite M3 Brigade and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Brigade 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.| M3 Brigade vs. Distoken Acquisition | M3 Brigade vs. Voyager Acquisition Corp | M3 Brigade vs. dMY Squared Technology | M3 Brigade vs. YHN Acquisition I |
| Kaiser Aluminum vs. Sligro Food Group | Kaiser Aluminum vs. FitLife Brands, Common | Kaiser Aluminum vs. Aeye Inc | Kaiser Aluminum vs. Ep Emerging Markets |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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