Correlation Between Alcoa Corp and Galaxy Digital
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Galaxy Digital 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 Galaxy Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Galaxy Digital Holdings, you can compare the effects of market volatilities on Alcoa Corp and Galaxy Digital 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 Galaxy Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Galaxy Digital.
Diversification Opportunities for Alcoa Corp and Galaxy Digital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and Galaxy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings 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 Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Galaxy Digital go up and down completely randomly.
Pair Corralation between Alcoa Corp and Galaxy Digital
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 8.44 times less return on investment than Galaxy Digital. But when comparing it to its historical volatility, Alcoa Corp is 1.65 times less risky than Galaxy Digital. It trades about 0.02 of its potential returns per unit of risk. Galaxy Digital Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 304.00 in Galaxy Digital Holdings on August 30, 2024 and sell it today you would earn a total of 1,478 from holding Galaxy Digital Holdings or generate 486.18% 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. Galaxy Digital Holdings
Performance |
| Timeline |
| Alcoa Corp |
| Galaxy Digital Holdings |
Alcoa Corp and Galaxy Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Galaxy Digital
The main advantage of trading using opposite Alcoa Corp and Galaxy Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Galaxy Digital 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 Galaxy Digital will offset losses from the drop in Galaxy Digital'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 |
| Galaxy Digital vs. SPENN Technology AS | Galaxy Digital vs. OFX Group Ltd | Galaxy Digital vs. Cypherpunk Holdings | Galaxy Digital vs. Cathedra Bitcoin |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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