Correlation Between LIFWW Old and Kaiser Aluminum

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

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

Diversification Opportunities for LIFWW Old and Kaiser Aluminum

0.0

Correlation Coefficient

LIFWW Old  Kaiser Aluminum

Pay attention - limited upside

The 3 months correlation between LIFWW and Kaiser is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LIFWW Old and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and LIFWW Old 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 LIFWW Old are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of LIFWW Old i.e., LIFWW Old and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between LIFWW Old and Kaiser Aluminum

If you would invest (100.00) in LIFWW Old on December 28, 2024 and sell it today you would earn a total of  100.00  from holding LIFWW Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LIFWW Old  vs.  Kaiser Aluminum

LIFWW Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFWW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LIFWW Old is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 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.

Pair Trading with LIFWW Old and Kaiser Aluminum

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

The idea behind LIFWW Old and Kaiser Aluminum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.