Correlation Between Alcoa Corp and Collegium Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Collegium Pharmaceutical 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 Collegium Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Collegium Pharmaceutical, you can compare the effects of market volatilities on Alcoa Corp and Collegium Pharmaceutical 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 Collegium Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Collegium Pharmaceutical.
Diversification Opportunities for Alcoa Corp and Collegium Pharmaceutical
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Collegium is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical 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 Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Collegium Pharmaceutical go up and down completely randomly.
Pair Corralation between Alcoa Corp and Collegium Pharmaceutical
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.27 times more return on investment than Collegium Pharmaceutical. However, Alcoa Corp is 1.27 times more volatile than Collegium Pharmaceutical. It trades about 0.24 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about -0.21 per unit of risk. If you would invest 4,009 in Alcoa Corp on September 1, 2024 and sell it today you would earn a total of 634.00 from holding Alcoa Corp or generate 15.81% 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. Collegium Pharmaceutical
Performance |
| Timeline |
| Alcoa Corp |
| Collegium Pharmaceutical |
Alcoa Corp and Collegium Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Collegium Pharmaceutical
The main advantage of trading using opposite Alcoa Corp and Collegium Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Collegium Pharmaceutical 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 Collegium Pharmaceutical will offset losses from the drop in Collegium Pharmaceutical's long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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