Correlation Between Kaiser Aluminum and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Kaiser Aluminum and Allegheny Technologies 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 Kaiser Aluminum and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaiser Aluminum and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Kaiser Aluminum and Allegheny Technologies 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 Kaiser Aluminum with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaiser Aluminum and Allegheny Technologies.
Diversification Opportunities for Kaiser Aluminum and Allegheny Technologies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kaiser and Allegheny is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Kaiser 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 Kaiser Aluminum are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Kaiser Aluminum and Allegheny Technologies
Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 1.03 times less return on investment than Allegheny Technologies. In addition to that, Kaiser Aluminum is 1.08 times more volatile than Allegheny Technologies Incorporated. It trades about 0.09 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.1 per unit of volatility. If you would invest 3,661 in Allegheny Technologies Incorporated on February 13, 2024 and sell it today you would earn a total of 2,354 from holding Allegheny Technologies Incorporated or generate 64.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaiser Aluminum vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Kaiser Aluminum |
| Allegheny Technologies |
Kaiser Aluminum and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaiser Aluminum and Allegheny Technologies
The main advantage of trading using opposite Kaiser Aluminum and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
| Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Mayville Engineering Co | Allegheny Technologies vs. Gulf Island Fabrication | Allegheny Technologies vs. ESAB 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.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |