Correlation Between Alcoa Corp and GROUP
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By analyzing existing cross correlation between Alcoa Corp and GROUP 1 AUTOMOTIVE, you can compare the effects of market volatilities on Alcoa Corp and GROUP 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 GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and GROUP.
Diversification Opportunities for Alcoa Corp and GROUP
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and GROUP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and GROUP 1 AUTOMOTIVE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GROUP 1 AUTOMOTIVE 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 GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GROUP 1 AUTOMOTIVE has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and GROUP go up and down completely randomly.
Pair Corralation between Alcoa Corp and GROUP
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 4.91 times more return on investment than GROUP. However, Alcoa Corp is 4.91 times more volatile than GROUP 1 AUTOMOTIVE. It trades about 0.02 of its potential returns per unit of risk. GROUP 1 AUTOMOTIVE is currently generating about 0.03 per unit of risk. If you would invest 4,528 in Alcoa Corp on August 28, 2024 and sell it today you would earn a total of 194.00 from holding Alcoa Corp or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.81% |
| Values | Daily Returns |
Alcoa Corp vs. GROUP 1 AUTOMOTIVE
Performance |
| Timeline |
| Alcoa Corp |
| GROUP 1 AUTOMOTIVE |
Alcoa Corp and GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and GROUP
The main advantage of trading using opposite Alcoa Corp and GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, GROUP 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 GROUP will offset losses from the drop in GROUP's long position.The idea behind Alcoa Corp and GROUP 1 AUTOMOTIVE 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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