Correlation Between Hyster Yale and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Hyster Yale 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 Hyster Yale and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyster Yale Materials Handling and Kaiser Aluminum, you can compare the effects of market volatilities on Hyster Yale 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 Hyster Yale with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and Kaiser Aluminum.
Diversification Opportunities for Hyster Yale and Kaiser Aluminum
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hyster and Kaiser is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Hyster Yale and Kaiser Aluminum
Assuming the 90 days trading horizon Hyster Yale is expected to generate 3.32 times less return on investment than Kaiser Aluminum. In addition to that, Hyster Yale is 1.08 times more volatile than Kaiser Aluminum. It trades about 0.04 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.14 per unit of volatility. If you would invest 5,976 in Kaiser Aluminum on September 10, 2024 and sell it today you would earn a total of 1,524 from holding Kaiser Aluminum or generate 25.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hyster Yale Materials Handling vs. Kaiser Aluminum
Performance |
Timeline |
Hyster Yale Materials |
Kaiser Aluminum |
Hyster Yale and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyster Yale and Kaiser Aluminum
The main advantage of trading using opposite Hyster Yale and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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.Hyster Yale vs. Automatic Data Processing | Hyster Yale vs. Public Storage | Hyster Yale vs. Kaiser Aluminum | Hyster Yale vs. ARDAGH METAL PACDL 0001 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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