Correlation Between Noranda Aluminum and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Noranda Aluminum and Century 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 Noranda Aluminum and Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noranda Aluminum Holding and Century Aluminum, you can compare the effects of market volatilities on Noranda Aluminum and Century 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 Noranda Aluminum with a short position of Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noranda Aluminum and Century Aluminum.
Diversification Opportunities for Noranda Aluminum and Century Aluminum
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Noranda and Century is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Noranda Aluminum Holding and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum and Noranda 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 Noranda Aluminum Holding are associated (or correlated) with Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Noranda Aluminum i.e., Noranda Aluminum and Century Aluminum go up and down completely randomly.
Pair Corralation between Noranda Aluminum and Century Aluminum
Assuming the 90 days horizon Noranda Aluminum Holding is expected to under-perform the Century Aluminum. In addition to that, Noranda Aluminum is 2.9 times more volatile than Century Aluminum. It trades about -0.12 of its total potential returns per unit of risk. Century Aluminum is currently generating about 0.08 per unit of volatility. If you would invest 655.00 in Century Aluminum on January 26, 2024 and sell it today you would earn a total of 1,084 from holding Century Aluminum or generate 165.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 17.84% |
| Values | Daily Returns |
Noranda Aluminum Holding vs. Century Aluminum
Performance |
| Timeline |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Century Aluminum |
Noranda Aluminum and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noranda Aluminum and Century Aluminum
The main advantage of trading using opposite Noranda Aluminum and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noranda Aluminum position performs unexpectedly, Century 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Noranda Aluminum vs. Loandepot | Noranda Aluminum vs. Lend Lease Group | Noranda Aluminum vs. Alta Equipment Group | Noranda Aluminum vs. Mitsubishi UFJ Lease |
| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
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 CEOs Directory module to screen CEOs from public companies around the world.
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