Correlation Between Alcoa Corp and SAI Old
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and SAI Old 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 SAI Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and SAI Old, you can compare the effects of market volatilities on Alcoa Corp and SAI Old 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 SAI Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and SAI Old.
Diversification Opportunities for Alcoa Corp and SAI Old
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alcoa and SAI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and SAI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAI Old 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 SAI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAI Old has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and SAI Old go up and down completely randomly.
Pair Corralation between Alcoa Corp and SAI Old
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the SAI Old. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 4.36 times less risky than SAI Old. The stock trades about -0.01 of its potential returns per unit of risk. The SAI Old is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 138.00 in SAI Old on October 12, 2024 and sell it today you would lose (21.00) from holding SAI Old or give up 15.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.53% |
| Values | Daily Returns |
Alcoa Corp vs. SAI Old
Performance |
| Timeline |
| Alcoa Corp |
| SAI Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Alcoa Corp and SAI Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and SAI Old
The main advantage of trading using opposite Alcoa Corp and SAI Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, SAI Old 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 SAI Old will offset losses from the drop in SAI Old's long position.| Alcoa Corp vs. Wheaton Precious Metals | Alcoa Corp vs. Franco Nevada | Alcoa Corp vs. Royal Gold | Alcoa Corp vs. Fortuna Silver Mines |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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