Correlation Between Alcoa Corp and Itau CorpBanca
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Itau CorpBanca 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 Itau CorpBanca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Itau CorpBanca ADR, you can compare the effects of market volatilities on Alcoa Corp and Itau CorpBanca 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 Itau CorpBanca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Itau CorpBanca.
Diversification Opportunities for Alcoa Corp and Itau CorpBanca
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alcoa and Itau is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Itau CorpBanca ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itau CorpBanca ADR 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 Itau CorpBanca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itau CorpBanca ADR has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Itau CorpBanca go up and down completely randomly.
Pair Corralation between Alcoa Corp and Itau CorpBanca
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.18 times less return on investment than Itau CorpBanca. In addition to that, Alcoa Corp is 1.32 times more volatile than Itau CorpBanca ADR. It trades about 0.02 of its total potential returns per unit of risk. Itau CorpBanca ADR is currently generating about 0.05 per unit of volatility. If you would invest 311.00 in Itau CorpBanca ADR on August 30, 2024 and sell it today you would earn a total of 31.00 from holding Itau CorpBanca ADR or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 19.56% |
| Values | Daily Returns |
Alcoa Corp vs. Itau CorpBanca ADR
Performance |
| Timeline |
| Alcoa Corp |
| Itau CorpBanca ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and Itau CorpBanca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Itau CorpBanca
The main advantage of trading using opposite Alcoa Corp and Itau CorpBanca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Itau CorpBanca 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 Itau CorpBanca will offset losses from the drop in Itau CorpBanca's long position.| Alcoa Corp vs. Franco Nevada | Alcoa Corp vs. Osisko Gold Ro | Alcoa Corp vs. Sandstorm Gold Ltd | Alcoa Corp vs. Royal Gold |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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