Correlation Between Custom Truck and Kaiser Aluminum

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

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

Diversification Opportunities for Custom Truck and Kaiser Aluminum

0.88

Correlation Coefficient

Custom Truck  Kaiser Aluminum

Very poor diversification

The 3 months correlation between Custom and Kaiser is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Custom Truck and Kaiser Aluminum

Given the investment horizon of 90 days Custom Truck One is expected to generate 1.18 times more return on investment than Kaiser Aluminum. However, Custom Truck is 1.18 times more volatile than Kaiser Aluminum. It trades about 0.26 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.15 per unit of risk. If you would invest  391.00  in Custom Truck One on May 1, 2025 and sell it today you would earn a total of  179.00  from holding Custom Truck One or generate 45.78% return on investment over 90 days.

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

Custom Truck One  vs.  Kaiser Aluminum

Custom Truck One

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kaiser Aluminum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 12 (%) 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.

Pair Trading with Custom Truck and Kaiser Aluminum

The main advantage of trading using opposite Custom Truck and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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 Custom Truck One 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.