Correlation Between Kaiser Aluminum and Everus Construction

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

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

Diversification Opportunities for Kaiser Aluminum and Everus Construction

-0.45

Correlation Coefficient

Kaiser Aluminum  Everus Construction

Very good diversification

The 3 months correlation between Kaiser and Everus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Everus Construction go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Everus Construction

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.26 times more return on investment than Everus Construction. However, Kaiser Aluminum is 3.79 times less risky than Everus Construction. It trades about 0.3 of its potential returns per unit of risk. Everus Construction Group is currently generating about 0.04 per unit of risk. If you would invest  7,009  in Kaiser Aluminum on October 22, 2024 and sell it today you would earn a total of  359.00  from holding Kaiser Aluminum or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kaiser Aluminum  vs.  Everus Construction Group

Kaiser Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Kaiser Aluminum is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Everus Construction

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Everus Construction

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

The idea behind Kaiser Aluminum and Everus Construction Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.