Correlation Between Alcoa Corp and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Airtel Africa Plc, you can compare the effects of market volatilities on Alcoa Corp and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Airtel Africa.
Diversification Opportunities for Alcoa Corp and Airtel Africa
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Airtel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Airtel Africa go up and down completely randomly.
Pair Corralation between Alcoa Corp and Airtel Africa
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Airtel Africa. In addition to that, Alcoa Corp is 1.79 times more volatile than Airtel Africa Plc. It trades about -0.01 of its total potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.01 per unit of volatility. If you would invest 1,441 in Airtel Africa Plc on November 21, 2024 and sell it today you would earn a total of 66.00 from holding Airtel Africa Plc or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.36% |
| Values | Daily Returns |
Alcoa Corp vs. Airtel Africa Plc
Performance |
| Timeline |
| Alcoa Corp |
| Airtel Africa Plc |
Alcoa Corp and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Airtel Africa
The main advantage of trading using opposite Alcoa Corp and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum | Alcoa Corp vs. Norsk Hydro ASA |
| Airtel Africa vs. Summit Materials | Airtel Africa vs. Cedar Realty Trust | Airtel Africa vs. LB Foster | Airtel Africa vs. Arrow Electronics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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