Correlation Between Kaiser Aluminum and KeyCorp

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

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

Diversification Opportunities for Kaiser Aluminum and KeyCorp

-0.06

Correlation Coefficient

Kaiser Aluminum  KeyCorp

Good diversification

The 3 months correlation between Kaiser and KeyCorp is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and KeyCorp go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and KeyCorp

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 3.47 times more return on investment than KeyCorp. However, Kaiser Aluminum is 3.47 times more volatile than KeyCorp. It trades about 0.01 of its potential returns per unit of risk. KeyCorp is currently generating about 0.02 per unit of risk. If you would invest  7,073  in Kaiser Aluminum on December 1, 2024 and sell it today you would earn a total of  3.00  from holding Kaiser Aluminum or generate 0.04% return on investment over 90 days.

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

Kaiser Aluminum  vs.  KeyCorp

Kaiser Aluminum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaiser Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

KeyCorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kaiser Aluminum and KeyCorp

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

The idea behind Kaiser Aluminum and KeyCorp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.