Correlation Between Century Aluminum and Triad Guaranty

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

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

Diversification Opportunities for Century Aluminum and Triad Guaranty

0.0

Correlation Coefficient

Century Aluminum  Triad Guaranty

Pay attention - limited upside

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

Pair Corralation between Century Aluminum and Triad Guaranty

If you would invest  1,420  in Century Aluminum on September 15, 2024 and sell it today you would earn a total of  667.00  from holding Century Aluminum or generate 46.97% return on investment over 90 days.

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

Century Aluminum  vs.  Triad Guaranty

Century Aluminum

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Aluminum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Century Aluminum showed solid returns over the last few months and may actually be approaching a breakup point.

Triad Guaranty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Guaranty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Triad Guaranty is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Century Aluminum and Triad Guaranty

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

The idea behind Century Aluminum and Triad Guaranty 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.

Check out your portfolio center.

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.