Correlation Between Century Aluminum and FTD Companies

Can any of the company-specific risk be diversified away by investing in both Century Aluminum and FTD Companies 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 FTD Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Aluminum and FTD Companies, you can compare the effects of market volatilities on Century Aluminum and FTD Companies 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 FTD Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and FTD Companies.

Diversification Opportunities for Century Aluminum and FTD Companies

0.0

Correlation Coefficient

Century Aluminum  FTD Companies

Pay attention - limited upside

The 3 months correlation between Century and FTD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and FTD Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTD Companies 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 FTD Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTD Companies has no effect on the direction of Century Aluminum i.e., Century Aluminum and FTD Companies go up and down completely randomly.

Pair Corralation between Century Aluminum and FTD Companies

If you would invest  788.00  in Century Aluminum on September 13, 2024 and sell it today you would earn a total of  1,372  from holding Century Aluminum or generate 174.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Century Aluminum  vs.  FTD Companies

Century Aluminum

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

FTD Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTD Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FTD Companies is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Century Aluminum and FTD Companies

The main advantage of trading using opposite Century Aluminum and FTD Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, FTD Companies 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 FTD Companies will offset losses from the drop in FTD Companies' long position.

The idea behind Century Aluminum and FTD Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.