Correlation Between Alcoa Corp and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and iShares Trust, you can compare the effects of market volatilities on Alcoa Corp and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and IShares Trust.
Diversification Opportunities for Alcoa Corp and IShares Trust
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and IShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and IShares Trust go up and down completely randomly.
Pair Corralation between Alcoa Corp and IShares Trust
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 7.88 times more return on investment than IShares Trust. However, Alcoa Corp is 7.88 times more volatile than iShares Trust. It trades about 0.19 of its potential returns per unit of risk. iShares Trust is currently generating about 0.29 per unit of risk. If you would invest 4,073 in Alcoa Corp on September 5, 2024 and sell it today you would earn a total of 514.00 from holding Alcoa Corp or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Alcoa Corp vs. iShares Trust
Performance |
| Timeline |
| Alcoa Corp |
| iShares Trust |
Alcoa Corp and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and IShares Trust
The main advantage of trading using opposite Alcoa Corp and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
| IShares Trust vs. Vanguard Total Stock | IShares Trust vs. SPDR SP 500 | IShares Trust vs. Vanguard Total Bond | IShares Trust vs. Vanguard Value Index |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |