Correlation Between Century Aluminum and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Reliance Steel 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 Century Aluminum and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Reliance Steel Aluminum, you can compare the effects of market volatilities on Century Aluminum and Reliance Steel 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 Century Aluminum with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Reliance Steel.
Diversification Opportunities for Century Aluminum and Reliance Steel
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Century and Reliance is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Century Aluminum 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 Century Aluminum are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Century Aluminum i.e., Century Aluminum and Reliance Steel go up and down completely randomly.
Pair Corralation between Century Aluminum and Reliance Steel
Given the investment horizon of 90 days Century Aluminum is expected to generate 1.71 times more return on investment than Reliance Steel. However, Century Aluminum is 1.71 times more volatile than Reliance Steel Aluminum. It trades about -0.01 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.41 per unit of risk. If you would invest 1,709 in Century Aluminum on February 6, 2024 and sell it today you would lose (28.00) from holding Century Aluminum or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Reliance Steel Aluminum
Performance |
| Timeline |
| Century Aluminum |
| Reliance Steel Aluminum |
Century Aluminum and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Reliance Steel
The main advantage of trading using opposite Century Aluminum and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Reliance Steel vs. Universal Stainless Alloy | Reliance Steel vs. Outokumpu Oyj ADR | Reliance Steel vs. Olympic Steel | Reliance Steel vs. POSCO Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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