Correlation Between Alcoa Corp and IShares Thematic
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and IShares Thematic 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 IShares Thematic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and iShares Thematic Rotation, you can compare the effects of market volatilities on Alcoa Corp and IShares Thematic 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 IShares Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and IShares Thematic.
Diversification Opportunities for Alcoa Corp and IShares Thematic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and iShares Thematic Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Thematic Rotation 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 IShares Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Thematic Rotation has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and IShares Thematic go up and down completely randomly.
Pair Corralation between Alcoa Corp and IShares Thematic
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the IShares Thematic. In addition to that, Alcoa Corp is 4.32 times more volatile than iShares Thematic Rotation. It trades about -0.04 of its total potential returns per unit of risk. iShares Thematic Rotation is currently generating about 0.1 per unit of volatility. If you would invest 3,441 in iShares Thematic Rotation on September 13, 2024 and sell it today you would earn a total of 52.00 from holding iShares Thematic Rotation or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. iShares Thematic Rotation
Performance |
| Timeline |
| Alcoa Corp |
| iShares Thematic Rotation |
Alcoa Corp and IShares Thematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and IShares Thematic
The main advantage of trading using opposite Alcoa Corp and IShares Thematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, IShares Thematic 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 IShares Thematic will offset losses from the drop in IShares Thematic's long position.| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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