Correlation Between Mutual Of and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Mutual Of and Century 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 Mutual Of and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Century Aluminum, you can compare the effects of market volatilities on Mutual Of and Century 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 Mutual Of with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Century Aluminum.
Diversification Opportunities for Mutual Of and Century Aluminum
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mutual and Century is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Mutual Of 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 Mutual Of America are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Mutual Of i.e., Mutual Of and Century Aluminum go up and down completely randomly.
Pair Corralation between Mutual Of and Century Aluminum
Assuming the 90 days horizon Mutual Of is expected to generate 17.96 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, Mutual Of America is 10.58 times less risky than Century Aluminum. It trades about 0.13 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,823 in Century Aluminum on August 27, 2024 and sell it today you would earn a total of 426.00 from holding Century Aluminum or generate 23.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. Century Aluminum
Performance |
| Timeline |
| Mutual Of America |
| Century Aluminum |
Mutual Of and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Century Aluminum
The main advantage of trading using opposite Mutual Of and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of position performs unexpectedly, Century 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Mutual Of vs. Victory High Income | Mutual Of vs. Vanguard Global Credit | Mutual Of vs. Ms Global Fixed | Mutual Of vs. Kinetics Spin Off And |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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