Correlation Between Alcoa Corp and America Great
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and America Great 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 Alcoa Corp and America Great into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and America Great Health, you can compare the effects of market volatilities on Alcoa Corp and America Great 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 Alcoa Corp with a short position of America Great. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and America Great.
Diversification Opportunities for Alcoa Corp and America Great
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and America is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and America Great Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Great Health and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with America Great. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Great Health has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and America Great go up and down completely randomly.
Pair Corralation between Alcoa Corp and America Great
If you would invest 4,131 in Alcoa Corp on August 28, 2024 and sell it today you would earn a total of 591.00 from holding Alcoa Corp or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. America Great Health
Performance |
| Timeline |
| Alcoa Corp |
| America Great Health |
Alcoa Corp and America Great Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and America Great
The main advantage of trading using opposite Alcoa Corp and America Great positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, America Great 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 America Great will offset losses from the drop in America Great's long position.The idea behind Alcoa Corp and America Great Health 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.
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