Correlation Between Alcoa Corp and Ivy Advantus

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Ivy Advantus 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 Ivy Advantus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Ivy Advantus Bond, you can compare the effects of market volatilities on Alcoa Corp and Ivy Advantus 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 Ivy Advantus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Ivy Advantus.

Diversification Opportunities for Alcoa Corp and Ivy Advantus

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alcoa and Ivy is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Ivy Advantus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Advantus Bond 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 Ivy Advantus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Advantus Bond has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Ivy Advantus go up and down completely randomly.

Pair Corralation between Alcoa Corp and Ivy Advantus

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 7.33 times more return on investment than Ivy Advantus. However, Alcoa Corp is 7.33 times more volatile than Ivy Advantus Bond. It trades about 0.03 of its potential returns per unit of risk. Ivy Advantus Bond is currently generating about 0.04 per unit of risk. If you would invest  3,358  in Alcoa Corp on September 12, 2024 and sell it today you would earn a total of  751.00  from holding Alcoa Corp or generate 22.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy77.21%
ValuesDaily Returns

Alcoa Corp  vs.  Ivy Advantus Bond

 Performance 
       Timeline  
Alcoa Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.
Ivy Advantus Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ivy Advantus Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ivy Advantus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Corp and Ivy Advantus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and Ivy Advantus

The main advantage of trading using opposite Alcoa Corp and Ivy Advantus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Ivy Advantus 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 Ivy Advantus will offset losses from the drop in Ivy Advantus' long position.
The idea behind Alcoa Corp and Ivy Advantus Bond 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.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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