Correlation Between Alcoa Corp and Crescent Point
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Crescent Point 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 Crescent Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Crescent Point Energy, you can compare the effects of market volatilities on Alcoa Corp and Crescent Point 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 Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Crescent Point.
Diversification Opportunities for Alcoa Corp and Crescent Point
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and Crescent is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy 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 Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Crescent Point go up and down completely randomly.
Pair Corralation between Alcoa Corp and Crescent Point
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.13 times less return on investment than Crescent Point. In addition to that, Alcoa Corp is 1.39 times more volatile than Crescent Point Energy. It trades about 0.01 of its total potential returns per unit of risk. Crescent Point Energy is currently generating about 0.04 per unit of volatility. If you would invest 616.00 in Crescent Point Energy on August 27, 2024 and sell it today you would earn a total of 183.00 from holding Crescent Point Energy or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.45% |
| Values | Daily Returns |
Alcoa Corp vs. Crescent Point Energy
Performance |
| Timeline |
| Alcoa Corp |
| Crescent Point Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and Crescent Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Crescent Point
The main advantage of trading using opposite Alcoa Corp and Crescent Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Crescent Point 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 Crescent Point will offset losses from the drop in Crescent Point's long position.The idea behind Alcoa Corp and Crescent Point Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Crescent Point vs. Vermilion Energy | Crescent Point vs. Canadian Natural Resources | Crescent Point vs. Baytex Energy Corp | Crescent Point vs. Ovintiv |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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