Correlation Between Initio and Aluminum

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

By analyzing existing cross correlation between Initio Inc and Aluminum of, you can compare the effects of market volatilities on Initio and 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 Initio with a short position of Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Initio and Aluminum.

Diversification Opportunities for Initio and Aluminum

0.16

Correlation Coefficient

Initio  Aluminum

Average diversification

The 3 months correlation between Initio and Aluminum is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Initio Inc and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum and Initio 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 Initio Inc are associated (or correlated) with Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of Initio i.e., Initio and Aluminum go up and down completely randomly.

Pair Corralation between Initio and Aluminum

Given the investment horizon of 90 days Initio Inc is expected to generate 0.57 times more return on investment than Aluminum. However, Initio Inc is 1.76 times less risky than Aluminum. It trades about -0.15 of its potential returns per unit of risk. Aluminum of is currently generating about -0.1 per unit of risk. If you would invest  42.00  in Initio Inc on October 11, 2024 and sell it today you would lose (7.00) from holding Initio Inc or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Initio Inc  vs.  Aluminum of

Initio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Initio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Initio and Aluminum

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

The idea behind Initio Inc and Aluminum of 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 Global Correlations module to find global opportunities by holding instruments from different markets.