Correlation Between Alcoa Corp and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and ProShares UltraShort 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 ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and ProShares UltraShort MidCap400, you can compare the effects of market volatilities on Alcoa Corp and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and ProShares UltraShort.
Diversification Opportunities for Alcoa Corp and ProShares UltraShort
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and ProShares is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and ProShares UltraShort MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Alcoa Corp and ProShares UltraShort
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.42 times more return on investment than ProShares UltraShort. However, Alcoa Corp is 1.42 times more volatile than ProShares UltraShort MidCap400. It trades about 0.03 of its potential returns per unit of risk. ProShares UltraShort MidCap400 is currently generating about -0.08 per unit of risk. If you would invest 4,376 in Alcoa Corp on September 1, 2024 and sell it today you would earn a total of 267.00 from holding Alcoa Corp or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Alcoa Corp vs. ProShares UltraShort MidCap400
Performance |
| Timeline |
| Alcoa Corp |
| ProShares UltraShort |
Alcoa Corp and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and ProShares UltraShort
The main advantage of trading using opposite Alcoa Corp and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |