Correlation Between Alcoa Corp and Air Products
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Air Products 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 Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Air Products and, you can compare the effects of market volatilities on Alcoa Corp and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Air Products.
Diversification Opportunities for Alcoa Corp and Air Products
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Air Products go up and down completely randomly.
Pair Corralation between Alcoa Corp and Air Products
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Air Products. In addition to that, Alcoa Corp is 2.81 times more volatile than Air Products and. It trades about -0.05 of its total potential returns per unit of risk. Air Products and is currently generating about 0.01 per unit of volatility. If you would invest 31,112 in Air Products and on September 13, 2024 and sell it today you would earn a total of 48.00 from holding Air Products and or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Air Products and
Performance |
| Timeline |
| Alcoa Corp |
| Air Products |
Alcoa Corp and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Air Products
The main advantage of trading using opposite Alcoa Corp and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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