Correlation Between Alcoa Corp and National Bank
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and National Bank of, you can compare the effects of market volatilities on Alcoa Corp and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and National Bank.
Diversification Opportunities for Alcoa Corp and National Bank
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and National is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and National Bank go up and down completely randomly.
Pair Corralation between Alcoa Corp and National Bank
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the National Bank. In addition to that, Alcoa Corp is 2.75 times more volatile than National Bank of. It trades about -0.07 of its total potential returns per unit of risk. National Bank of is currently generating about -0.04 per unit of volatility. If you would invest 9,616 in National Bank of on September 12, 2024 and sell it today you would lose (112.00) from holding National Bank of or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. National Bank of
Performance |
| Timeline |
| Alcoa Corp |
| National Bank |
Alcoa Corp and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and National Bank
The main advantage of trading using opposite Alcoa Corp and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Alcoa Corp vs. Sligro Food Group | Alcoa Corp vs. FitLife Brands, Common | Alcoa Corp vs. Aeye Inc | Alcoa Corp vs. Ep Emerging Markets |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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