Correlation Between United States and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Kaiser 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 Kaiser Aluminum, you can compare the effects of market volatilities on United States 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 United States with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Kaiser Aluminum.
Diversification Opportunities for United States and Kaiser Aluminum
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Kaiser is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser 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 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 United States i.e., United States and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between United States and Kaiser Aluminum
Taking into account the 90-day investment horizon United States is expected to generate 6.26 times less return on investment than Kaiser Aluminum. In addition to that, United States is 1.28 times more volatile than Kaiser Aluminum. It trades about 0.02 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.19 per unit of volatility. If you would invest 7,607 in Kaiser Aluminum on August 27, 2024 and sell it today you would earn a total of 771.00 from holding Kaiser Aluminum or generate 10.14% 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. Kaiser Aluminum
Performance |
| Timeline |
| United States Steel |
| Kaiser Aluminum |
United States and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Kaiser Aluminum
The main advantage of trading using opposite United States and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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