Correlation Between Alcoa Corp and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and AIM ETF 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 AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and AIM ETF Products, you can compare the effects of market volatilities on Alcoa Corp and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and AIM ETF.
Diversification Opportunities for Alcoa Corp and AIM ETF
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and AIM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and AIM ETF go up and down completely randomly.
Pair Corralation between Alcoa Corp and AIM ETF
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 9.02 times more return on investment than AIM ETF. However, Alcoa Corp is 9.02 times more volatile than AIM ETF Products. It trades about 0.24 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.39 per unit of risk. If you would invest 4,009 in Alcoa Corp on September 1, 2024 and sell it today you would earn a total of 634.00 from holding Alcoa Corp or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alcoa Corp vs. AIM ETF Products
Performance |
| Timeline |
| Alcoa Corp |
| AIM ETF Products |
Alcoa Corp and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and AIM ETF
The main advantage of trading using opposite Alcoa Corp and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF's long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
| AIM ETF vs. Innovator ETFs Trust | AIM ETF vs. First Trust Cboe | AIM ETF vs. Innovator SP 500 | AIM ETF vs. Innovator SP 500 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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