Correlation Between Alcoa Corp and Oxbridge Acquisition
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Oxbridge Acquisition 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 Oxbridge Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Oxbridge Acquisition Equity, you can compare the effects of market volatilities on Alcoa Corp and Oxbridge Acquisition 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 Oxbridge Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Oxbridge Acquisition.
Diversification Opportunities for Alcoa Corp and Oxbridge Acquisition
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Oxbridge is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Oxbridge Acquisition Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxbridge Acquisition 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 Oxbridge Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxbridge Acquisition has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Oxbridge Acquisition go up and down completely randomly.
Pair Corralation between Alcoa Corp and Oxbridge Acquisition
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 22.01 times less return on investment than Oxbridge Acquisition. But when comparing it to its historical volatility, Alcoa Corp is 4.02 times less risky than Oxbridge Acquisition. It trades about 0.02 of its potential returns per unit of risk. Oxbridge Acquisition Equity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.40 in Oxbridge Acquisition Equity on September 3, 2024 and sell it today you would earn a total of 1.94 from holding Oxbridge Acquisition Equity or generate 57.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 20.2% |
| Values | Daily Returns |
Alcoa Corp vs. Oxbridge Acquisition Equity
Performance |
| Timeline |
| Alcoa Corp |
| Oxbridge Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and Oxbridge Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Oxbridge Acquisition
The main advantage of trading using opposite Alcoa Corp and Oxbridge Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Oxbridge Acquisition 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 Oxbridge Acquisition will offset losses from the drop in Oxbridge Acquisition's long position.The idea behind Alcoa Corp and Oxbridge Acquisition Equity 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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