Correlation Between Alcoa Corp and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Smart REIT 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 Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Smart REIT, you can compare the effects of market volatilities on Alcoa Corp and Smart REIT 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 Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Smart REIT.
Diversification Opportunities for Alcoa Corp and Smart REIT
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and Smart is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Smart REIT go up and down completely randomly.
Pair Corralation between Alcoa Corp and Smart REIT
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.99 times more return on investment than Smart REIT. However, Alcoa Corp is 1.01 times less risky than Smart REIT. It trades about 0.02 of its potential returns per unit of risk. Smart REIT is currently generating about 0.01 per unit of risk. If you would invest 4,544 in Alcoa Corp on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Alcoa Corp or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Alcoa Corp vs. Smart REIT
Performance |
| Timeline |
| Alcoa Corp |
| Smart REIT |
Alcoa Corp and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Smart REIT
The main advantage of trading using opposite Alcoa Corp and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Alcoa Corp vs. Eshallgo Class A | Alcoa Corp vs. Amtech Systems | Alcoa Corp vs. Gold Fields Ltd | Alcoa Corp vs. Aegean Airlines SA |
| Smart REIT vs. Phillips Edison Co | Smart REIT vs. Choice Properties Real | Smart REIT vs. Simon Property Group | Smart REIT vs. Plaza Retail REIT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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