Correlation Between Kaiser Aluminum and BRIT AMER

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

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

Diversification Opportunities for Kaiser Aluminum and BRIT AMER

0.56

Correlation Coefficient

Kaiser Aluminum  BRIT AMER

Very weak diversification

The 3 months correlation between Kaiser and BRIT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and BRIT AMER go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and BRIT AMER

Assuming the 90 days trading horizon Kaiser Aluminum is expected to under-perform the BRIT AMER. In addition to that, Kaiser Aluminum is 2.39 times more volatile than BRIT AMER TOBACCO. It trades about 0.0 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.03 per unit of volatility. If you would invest  3,038  in BRIT AMER TOBACCO on September 26, 2024 and sell it today you would earn a total of  417.00  from holding BRIT AMER TOBACCO or generate 13.73% return on investment over 90 days.

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

Kaiser Aluminum  vs.  BRIT AMER TOBACCO

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. Despite nearly uncertain basic indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BRIT AMER TOBACCO

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BRIT AMER TOBACCO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BRIT AMER is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kaiser Aluminum and BRIT AMER

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

The idea behind Kaiser Aluminum and BRIT AMER TOBACCO 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..