Correlation Between Alcoa Corp and Growlife
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Growlife 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 Growlife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Growlife, you can compare the effects of market volatilities on Alcoa Corp and Growlife 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 Growlife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Growlife.
Diversification Opportunities for Alcoa Corp and Growlife
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and Growlife is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Growlife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growlife 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 Growlife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growlife has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Growlife go up and down completely randomly.
Pair Corralation between Alcoa Corp and Growlife
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 145.14 times less return on investment than Growlife. But when comparing it to its historical volatility, Alcoa Corp is 25.8 times less risky than Growlife. It trades about 0.02 of its potential returns per unit of risk. Growlife is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Growlife on August 30, 2024 and sell it today you would lose (5.99) from holding Growlife or give up 99.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Growlife
Performance |
| Timeline |
| Alcoa Corp |
| Growlife |
Alcoa Corp and Growlife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Growlife
The main advantage of trading using opposite Alcoa Corp and Growlife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Growlife 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 Growlife will offset losses from the drop in Growlife's long position.| Alcoa Corp vs. Direxion Daily FTSE | Alcoa Corp vs. Dodge Global Stock | Alcoa Corp vs. Collegium Pharmaceutical | Alcoa Corp vs. Dreyfus Natural Resources |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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