Correlation Between United States and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Century Aluminum, you can compare the effects of market volatilities on United States 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 United States with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Century Aluminum.
Diversification Opportunities for United States and Century Aluminum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Century is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and United States 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 United States Steel 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 United States i.e., United States and Century Aluminum go up and down completely randomly.
Pair Corralation between United States and Century Aluminum
Taking into account the 90-day investment horizon United States is expected to generate 2.58 times less return on investment than Century Aluminum. But when comparing it to its historical volatility, United States Steel is 1.5 times less risky than Century Aluminum. It trades about 0.03 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,874 in Century Aluminum on August 26, 2024 and sell it today you would earn a total of 375.00 from holding Century Aluminum or generate 20.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Century Aluminum
Performance |
| Timeline |
| United States Steel |
| Century Aluminum |
United States and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Century Aluminum
The main advantage of trading using opposite United States and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |