Correlation Between Alcoa Corp and CATERPILLAR
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By analyzing existing cross correlation between Alcoa Corp and CATERPILLAR INC 53, you can compare the effects of market volatilities on Alcoa Corp and CATERPILLAR 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 CATERPILLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and CATERPILLAR.
Diversification Opportunities for Alcoa Corp and CATERPILLAR
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and CATERPILLAR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and CATERPILLAR INC 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATERPILLAR INC 53 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 CATERPILLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATERPILLAR INC 53 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and CATERPILLAR go up and down completely randomly.
Pair Corralation between Alcoa Corp and CATERPILLAR
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the CATERPILLAR. In addition to that, Alcoa Corp is 4.5 times more volatile than CATERPILLAR INC 53. It trades about -0.07 of its total potential returns per unit of risk. CATERPILLAR INC 53 is currently generating about 0.06 per unit of volatility. If you would invest 10,345 in CATERPILLAR INC 53 on September 12, 2024 and sell it today you would earn a total of 87.00 from holding CATERPILLAR INC 53 or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alcoa Corp vs. CATERPILLAR INC 53
Performance |
| Timeline |
| Alcoa Corp |
| CATERPILLAR INC 53 |
Alcoa Corp and CATERPILLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and CATERPILLAR
The main advantage of trading using opposite Alcoa Corp and CATERPILLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, CATERPILLAR 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 CATERPILLAR will offset losses from the drop in CATERPILLAR's long position.| Alcoa Corp vs. Sligro Food Group | Alcoa Corp vs. FitLife Brands, Common | Alcoa Corp vs. Aeye Inc | Alcoa Corp vs. Ep Emerging Markets |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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