Correlation Between Summit Materials and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Kaiser Aluminum, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Kaiser Aluminum.
Diversification Opportunities for Summit Materials and Kaiser Aluminum
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Kaiser is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Summit Materials and Kaiser Aluminum
Considering the 90-day investment horizon Summit Materials is expected to generate 1.15 times less return on investment than Kaiser Aluminum. But when comparing it to its historical volatility, Summit Materials is 1.09 times less risky than Kaiser Aluminum. It trades about 0.14 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,560 in Kaiser Aluminum on September 2, 2024 and sell it today you would earn a total of 568.00 from holding Kaiser Aluminum or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Kaiser Aluminum
Performance |
| Timeline |
| Summit Materials |
| Kaiser Aluminum |
Summit Materials and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Kaiser Aluminum
The main advantage of trading using opposite Summit Materials and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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