Correlation Between Alcoa Corp and ALLIANT

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and ALLIANT 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 ALLIANT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and ALLIANT HLDGS INTER, you can compare the effects of market volatilities on Alcoa Corp and ALLIANT 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 ALLIANT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and ALLIANT.

Diversification Opportunities for Alcoa Corp and ALLIANT

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Alcoa and ALLIANT is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and ALLIANT HLDGS INTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANT HLDGS INTER 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 ALLIANT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLIANT HLDGS INTER has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and ALLIANT go up and down completely randomly.

Pair Corralation between Alcoa Corp and ALLIANT

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the ALLIANT. In addition to that, Alcoa Corp is 15.76 times more volatile than ALLIANT HLDGS INTER. It trades about -0.05 of its total potential returns per unit of risk. ALLIANT HLDGS INTER is currently generating about -0.04 per unit of volatility. If you would invest  9,666  in ALLIANT HLDGS INTER on November 28, 2024 and sell it today you would lose (16.00) from holding ALLIANT HLDGS INTER or give up 0.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alcoa Corp  vs.  ALLIANT HLDGS INTER

 Performance 
       Timeline  
Alcoa Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
ALLIANT HLDGS INTER 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ALLIANT HLDGS INTER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLIANT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Corp and ALLIANT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and ALLIANT

The main advantage of trading using opposite Alcoa Corp and ALLIANT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, ALLIANT 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 ALLIANT will offset losses from the drop in ALLIANT's long position.
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The idea behind Alcoa Corp and ALLIANT HLDGS INTER 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.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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