Correlation Between Alcoa Corp and GraniteShares 15x
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and GraniteShares 15x 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 GraniteShares 15x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and GraniteShares 15x Long, you can compare the effects of market volatilities on Alcoa Corp and GraniteShares 15x 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 GraniteShares 15x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and GraniteShares 15x.
Diversification Opportunities for Alcoa Corp and GraniteShares 15x
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and GraniteShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and GraniteShares 15x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 15x Long 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 GraniteShares 15x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 15x Long has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and GraniteShares 15x go up and down completely randomly.
Pair Corralation between Alcoa Corp and GraniteShares 15x
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.5 times less return on investment than GraniteShares 15x. But when comparing it to its historical volatility, Alcoa Corp is 1.99 times less risky than GraniteShares 15x. It trades about 0.08 of its potential returns per unit of risk. GraniteShares 15x Long is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,382 in GraniteShares 15x Long on August 27, 2024 and sell it today you would earn a total of 6,227 from holding GraniteShares 15x Long or generate 450.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. GraniteShares 15x Long
Performance |
| Timeline |
| Alcoa Corp |
| GraniteShares 15x Long |
Alcoa Corp and GraniteShares 15x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and GraniteShares 15x
The main advantage of trading using opposite Alcoa Corp and GraniteShares 15x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, GraniteShares 15x 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 GraniteShares 15x will offset losses from the drop in GraniteShares 15x's long position.The idea behind Alcoa Corp and GraniteShares 15x Long 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.| GraniteShares 15x vs. Direxion Daily MSFT | GraniteShares 15x vs. Direxion Daily GOOGL | GraniteShares 15x vs. AXS 125X NVDA | GraniteShares 15x vs. Direxion Shares ETF |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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