Correlation Between Alcoa Corp and New Age
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and New Age 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 New Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and New Age Metals, you can compare the effects of market volatilities on Alcoa Corp and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and New Age.
Diversification Opportunities for Alcoa Corp and New Age
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alcoa and New is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and New Age go up and down completely randomly.
Pair Corralation between Alcoa Corp and New Age
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the New Age. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 3.46 times less risky than New Age. The stock trades about -0.05 of its potential returns per unit of risk. The New Age Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.00 in New Age Metals on November 28, 2024 and sell it today you would earn a total of 0.47 from holding New Age Metals or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. New Age Metals
Performance |
| Timeline |
| Alcoa Corp |
| New Age Metals |
Alcoa Corp and New Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and New Age
The main advantage of trading using opposite Alcoa Corp and New Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, New Age 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 New Age will offset losses from the drop in New Age's long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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