Correlation Between NSTAR Electric and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both NSTAR Electric 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 NSTAR Electric and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NSTAR Electric and Kaiser Aluminum, you can compare the effects of market volatilities on NSTAR Electric 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 NSTAR Electric with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSTAR Electric and Kaiser Aluminum.
Diversification Opportunities for NSTAR Electric and Kaiser Aluminum
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NSTAR and Kaiser is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NSTAR Electric and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and NSTAR Electric 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 NSTAR Electric 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 NSTAR Electric i.e., NSTAR Electric and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between NSTAR Electric and Kaiser Aluminum
Assuming the 90 days horizon NSTAR Electric is expected to under-perform the Kaiser Aluminum. In addition to that, NSTAR Electric is 1.55 times more volatile than Kaiser Aluminum. It trades about -0.16 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.2 per unit of volatility. If you would invest 7,009 in Kaiser Aluminum on October 24, 2024 and sell it today you would earn a total of 251.00 from holding Kaiser Aluminum or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NSTAR Electric vs. Kaiser Aluminum
Performance |
| Timeline |
| NSTAR Electric |
| Kaiser Aluminum |
NSTAR Electric and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NSTAR Electric and Kaiser Aluminum
The main advantage of trading using opposite NSTAR Electric and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSTAR Electric 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.| NSTAR Electric vs. Ironveld Plc | NSTAR Electric vs. Alto Neuroscience, | NSTAR Electric vs. Uber Technologies | NSTAR Electric vs. ServiceNow |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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