Correlation Between Alcoa Corp and Mainstay
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Mainstay 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 Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Mainstay Sp 500, you can compare the effects of market volatilities on Alcoa Corp and Mainstay 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 Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Mainstay.
Diversification Opportunities for Alcoa Corp and Mainstay
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alcoa and Mainstay is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Mainstay go up and down completely randomly.
Pair Corralation between Alcoa Corp and Mainstay
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.55 times more return on investment than Mainstay. However, Alcoa Corp is 3.55 times more volatile than Mainstay Sp 500. It trades about 0.22 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.16 per unit of risk. If you would invest 4,131 in Alcoa Corp on August 28, 2024 and sell it today you would earn a total of 591.00 from holding Alcoa Corp or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Mainstay Sp 500
Performance |
| Timeline |
| Alcoa Corp |
| Mainstay Sp 500 |
Alcoa Corp and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Mainstay
The main advantage of trading using opposite Alcoa Corp and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Mainstay 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 Mainstay will offset losses from the drop in Mainstay's long position.The idea behind Alcoa Corp and Mainstay Sp 500 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.| Mainstay vs. Qs Large Cap | Mainstay vs. Omni Small Cap Value | Mainstay vs. Ab Global Risk | Mainstay vs. Small Cap Stock |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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