Correlation Between Century Aluminum and WPLAU

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Can any of the company-specific risk be diversified away by investing in both Century Aluminum and WPLAU 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 WPLAU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and WPLAU 37 15 SEP 26, you can compare the effects of market volatilities on Century Aluminum and WPLAU 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 WPLAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and WPLAU.

Diversification Opportunities for Century Aluminum and WPLAU

CenturyWPLAUDiversified AwayCenturyWPLAUDiversified Away100%
0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Century and WPLAU is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and WPLAU 37 15 SEP 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPLAU 37 15 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 WPLAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPLAU 37 15 has no effect on the direction of Century Aluminum i.e., Century Aluminum and WPLAU go up and down completely randomly.

Pair Corralation between Century Aluminum and WPLAU

Given the investment horizon of 90 days Century Aluminum is expected to generate 7.24 times more return on investment than WPLAU. However, Century Aluminum is 7.24 times more volatile than WPLAU 37 15 SEP 26. It trades about 0.1 of its potential returns per unit of risk. WPLAU 37 15 SEP 26 is currently generating about -0.18 per unit of risk. If you would invest  1,538  in Century Aluminum on September 24, 2024 and sell it today you would earn a total of  349.00  from holding Century Aluminum or generate 22.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy49.23%
ValuesDaily Returns

Century Aluminum  vs.  WPLAU 37 15 SEP 26

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0102030405060
JavaScript chart by amCharts 3.21.15CENX 980236AN3
       Timeline  
Century Aluminum 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 7 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec161820222426
WPLAU 37 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WPLAU 37 15 SEP 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WPLAU is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.1595.59696.59797.59898.5

Century Aluminum and WPLAU Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.16-9.11-6.06-3.00.043.166.379.5912.8 1234567
JavaScript chart by amCharts 3.21.15CENX 980236AN3
       Returns  

Pair Trading with Century Aluminum and WPLAU

The main advantage of trading using opposite Century Aluminum and WPLAU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, WPLAU 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 WPLAU will offset losses from the drop in WPLAU's long position.
The idea behind Century Aluminum and WPLAU 37 15 SEP 26 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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