Correlation Between Alcoa Corp and IShares Global
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and IShares Global 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 Global 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 Global Financials, you can compare the effects of market volatilities on Alcoa Corp and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and IShares Global.
Diversification Opportunities for Alcoa Corp and IShares Global
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alcoa and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and iShares Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Financials 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Financials has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and IShares Global go up and down completely randomly.
Pair Corralation between Alcoa Corp and IShares Global
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the IShares Global. In addition to that, Alcoa Corp is 2.07 times more volatile than iShares Global Financials. It trades about -0.19 of its total potential returns per unit of risk. iShares Global Financials is currently generating about -0.03 per unit of volatility. If you would invest 9,934 in iShares Global Financials on January 12, 2025 and sell it today you would lose (252.00) from holding iShares Global Financials or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alcoa Corp vs. iShares Global Financials
Performance |
| Timeline |
| Alcoa Corp |
| iShares Global Financials |
Alcoa Corp and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and IShares Global
The main advantage of trading using opposite Alcoa Corp and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global'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 Global vs. iShares Global Comm | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Global Tech | IShares Global vs. iShares Financial Services |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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