Correlation Between Alcoa Corp and SP Funds
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and SP Funds 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 SP Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and SP Funds Dow, you can compare the effects of market volatilities on Alcoa Corp and SP Funds 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 SP Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and SP Funds.
Diversification Opportunities for Alcoa Corp and SP Funds
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and SPSK is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and SP Funds Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Funds Dow 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 SP Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Funds Dow has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and SP Funds go up and down completely randomly.
Pair Corralation between Alcoa Corp and SP Funds
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 6.21 times more return on investment than SP Funds. However, Alcoa Corp is 6.21 times more volatile than SP Funds Dow. It trades about 0.04 of its potential returns per unit of risk. SP Funds Dow is currently generating about 0.05 per unit of risk. If you would invest 4,295 in Alcoa Corp on August 24, 2024 and sell it today you would earn a total of 350.00 from holding Alcoa Corp or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. SP Funds Dow
Performance |
| Timeline |
| Alcoa Corp |
| SP Funds Dow |
Alcoa Corp and SP Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and SP Funds
The main advantage of trading using opposite Alcoa Corp and SP Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, SP Funds 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 SP Funds will offset losses from the drop in SP Funds' long position.| Alcoa Corp vs. Small Cap Core | Alcoa Corp vs. Morningstar Unconstrained Allocation | Alcoa Corp vs. Mutual Of America | Alcoa Corp vs. Ep Emerging Markets |
| SP Funds vs. Invesco Fundamental Investment | SP Funds vs. iShares International High | SP Funds vs. VanEck International High |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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