Correlation Between Alcoa Corp and Acciona SA
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Acciona SA 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 Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Acciona SA, you can compare the effects of market volatilities on Alcoa Corp and Acciona SA 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 Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Acciona SA.
Diversification Opportunities for Alcoa Corp and Acciona SA
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and Acciona is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA 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 Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Acciona SA go up and down completely randomly.
Pair Corralation between Alcoa Corp and Acciona SA
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.02 times more return on investment than Acciona SA. However, Alcoa Corp is 1.02 times more volatile than Acciona SA. It trades about 0.16 of its potential returns per unit of risk. Acciona SA is currently generating about -0.07 per unit of risk. If you would invest 4,131 in Alcoa Corp on August 29, 2024 and sell it today you would earn a total of 449.00 from holding Alcoa Corp or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alcoa Corp vs. Acciona SA
Performance |
| Timeline |
| Alcoa Corp |
| Acciona SA |
Alcoa Corp and Acciona SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Acciona SA
The main advantage of trading using opposite Alcoa Corp and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.| Alcoa Corp vs. Direxion Daily FTSE | Alcoa Corp vs. Dodge Global Stock | Alcoa Corp vs. Collegium Pharmaceutical | Alcoa Corp vs. Dreyfus Natural Resources |
| Acciona SA vs. JGC Corp | Acciona SA vs. ACS Actividades de | Acciona SA vs. Kajima Corp ADR | Acciona SA vs. ACS Actividades De |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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