Correlation Between Kaiser Aluminum and Under Armour

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

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

Diversification Opportunities for Kaiser Aluminum and Under Armour

0.68

Correlation Coefficient

Kaiser Aluminum  Under Armour

Poor diversification

The 3 months correlation between Kaiser and Under is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of Kaiser Aluminum i.e., Kaiser Aluminum and Under Armour go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Under Armour

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.49 times more return on investment than Under Armour. However, Kaiser Aluminum is 2.06 times less risky than Under Armour. It trades about -0.22 of its potential returns per unit of risk. Under Armour C is currently generating about -0.17 per unit of risk. If you would invest  8,136  in Kaiser Aluminum on September 15, 2024 and sell it today you would lose (510.00) from holding Kaiser Aluminum or give up 6.27% of portfolio value over 90 days.

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

Kaiser Aluminum  vs.  Under Armour C

Kaiser Aluminum

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Under Armour C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaiser Aluminum and Under Armour

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

The idea behind Kaiser Aluminum and Under Armour C 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.