Correlation Between Alcoa Corp and SolarBank
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and SolarBank 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 SolarBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and SolarBank, you can compare the effects of market volatilities on Alcoa Corp and SolarBank 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 SolarBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and SolarBank.
Diversification Opportunities for Alcoa Corp and SolarBank
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and SolarBank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and SolarBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarBank 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 SolarBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarBank has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and SolarBank go up and down completely randomly.
Pair Corralation between Alcoa Corp and SolarBank
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 9.67 times less return on investment than SolarBank. But when comparing it to its historical volatility, Alcoa Corp is 1.67 times less risky than SolarBank. It trades about 0.04 of its potential returns per unit of risk. SolarBank is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 470.00 in SolarBank on August 31, 2024 and sell it today you would earn a total of 180.00 from holding SolarBank or generate 38.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.63% |
| Values | Daily Returns |
Alcoa Corp vs. SolarBank
Performance |
| Timeline |
| Alcoa Corp |
| SolarBank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Alcoa Corp and SolarBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and SolarBank
The main advantage of trading using opposite Alcoa Corp and SolarBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, SolarBank 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 SolarBank will offset losses from the drop in SolarBank's long position.| Alcoa Corp vs. RLJ Lodging Trust | Alcoa Corp vs. Aquagold International | Alcoa Corp vs. Stepstone Group | Alcoa Corp vs. Morningstar Unconstrained Allocation |
| SolarBank vs. Cars Inc | SolarBank vs. Visteon Corp | SolarBank vs. U Power Limited | SolarBank vs. PennantPark Floating Rate |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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