Correlation Between Alcoa Corp and Nuveen Intermediate
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Nuveen Intermediate 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 Nuveen Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Nuveen Intermediate Duration, you can compare the effects of market volatilities on Alcoa Corp and Nuveen Intermediate 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 Nuveen Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Nuveen Intermediate.
Diversification Opportunities for Alcoa Corp and Nuveen Intermediate
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and Nuveen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Nuveen Intermediate Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Intermediate 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 Nuveen Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Intermediate has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Nuveen Intermediate go up and down completely randomly.
Pair Corralation between Alcoa Corp and Nuveen Intermediate
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 4.61 times more return on investment than Nuveen Intermediate. However, Alcoa Corp is 4.61 times more volatile than Nuveen Intermediate Duration. It trades about 0.02 of its potential returns per unit of risk. Nuveen Intermediate Duration is currently generating about 0.07 per unit of risk. If you would invest 4,509 in Alcoa Corp on September 3, 2024 and sell it today you would earn a total of 134.00 from holding Alcoa Corp or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.75% |
| Values | Daily Returns |
Alcoa Corp vs. Nuveen Intermediate Duration
Performance |
| Timeline |
| Alcoa Corp |
| Nuveen Intermediate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and Nuveen Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Nuveen Intermediate
The main advantage of trading using opposite Alcoa Corp and Nuveen Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Nuveen Intermediate 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 Nuveen Intermediate will offset losses from the drop in Nuveen Intermediate's long position.The idea behind Alcoa Corp and Nuveen Intermediate Duration 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.| Nuveen Intermediate vs. GCM Grosvenor | Nuveen Intermediate vs. Nuveen Select Maturities | Nuveen Intermediate vs. Invesco Municipal Opportunity | Nuveen Intermediate vs. Blackrock Municipal Target |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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