Correlation Between 26442CAM6 and Kaiser Aluminum

Can any of the company-specific risk be diversified away by investing in both 26442CAM6 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 26442CAM6 and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DUKE ENERGY CAROLINAS and Kaiser Aluminum, you can compare the effects of market volatilities on 26442CAM6 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 26442CAM6 with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26442CAM6 and Kaiser Aluminum.

Diversification Opportunities for 26442CAM6 and Kaiser Aluminum

0.01

Correlation Coefficient

26442CAM6  Kaiser Aluminum

Significant diversification

The 3 months correlation between 26442CAM6 and Kaiser is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding DUKE ENERGY CAROLINAS and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and 26442CAM6 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 DUKE ENERGY CAROLINAS 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 26442CAM6 i.e., 26442CAM6 and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between 26442CAM6 and Kaiser Aluminum

Assuming the 90 days trading horizon DUKE ENERGY CAROLINAS is expected to generate 0.6 times more return on investment than Kaiser Aluminum. However, DUKE ENERGY CAROLINAS is 1.68 times less risky than Kaiser Aluminum. It trades about 0.09 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.01 per unit of risk. If you would invest  8,706  in DUKE ENERGY CAROLINAS on December 24, 2024 and sell it today you would earn a total of  467.00  from holding DUKE ENERGY CAROLINAS or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

DUKE ENERGY CAROLINAS  vs.  Kaiser Aluminum

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY CAROLINAS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 26442CAM6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 26442CAM6 and Kaiser Aluminum

The main advantage of trading using opposite 26442CAM6 and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26442CAM6 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 DUKE ENERGY CAROLINAS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.