Correlation Between Alcoa Corp and ACADIA
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By analyzing existing cross correlation between Alcoa Corp and ACADIA HEALTHCARE INC, you can compare the effects of market volatilities on Alcoa Corp and ACADIA 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 ACADIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and ACADIA.
Diversification Opportunities for Alcoa Corp and ACADIA
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alcoa and ACADIA is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and ACADIA HEALTHCARE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA HEALTHCARE INC 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 ACADIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACADIA HEALTHCARE INC has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and ACADIA go up and down completely randomly.
Pair Corralation between Alcoa Corp and ACADIA
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 16.17 times less return on investment than ACADIA. But when comparing it to its historical volatility, Alcoa Corp is 25.9 times less risky than ACADIA. It trades about 0.11 of its potential returns per unit of risk. ACADIA HEALTHCARE INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,450 in ACADIA HEALTHCARE INC on August 27, 2024 and sell it today you would lose (161.00) from holding ACADIA HEALTHCARE INC or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.49% |
| Values | Daily Returns |
Alcoa Corp vs. ACADIA HEALTHCARE INC
Performance |
| Timeline |
| Alcoa Corp |
| ACADIA HEALTHCARE INC |
Alcoa Corp and ACADIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and ACADIA
The main advantage of trading using opposite Alcoa Corp and ACADIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, ACADIA 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 ACADIA will offset losses from the drop in ACADIA's long position.The idea behind Alcoa Corp and ACADIA HEALTHCARE INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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