Correlation Between Alcoa Corp and 548661EK9

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Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and 548661EK9 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 548661EK9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and LOW 44 08 SEP 25, you can compare the effects of market volatilities on Alcoa Corp and 548661EK9 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 548661EK9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and 548661EK9.

Diversification Opportunities for Alcoa Corp and 548661EK9

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Alcoa and 548661EK9 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and LOW 44 08 SEP 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOW 44 08 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 548661EK9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOW 44 08 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and 548661EK9 go up and down completely randomly.

Pair Corralation between Alcoa Corp and 548661EK9

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 9.42 times more return on investment than 548661EK9. However, Alcoa Corp is 9.42 times more volatile than LOW 44 08 SEP 25. It trades about 0.03 of its potential returns per unit of risk. LOW 44 08 SEP 25 is currently generating about -0.01 per unit of risk. If you would invest  3,358  in Alcoa Corp on September 12, 2024 and sell it today you would earn a total of  751.00  from holding Alcoa Corp or generate 22.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.73%
ValuesDaily Returns

Alcoa Corp  vs.  LOW 44 08 SEP 25

 Performance 
       Timeline  
Alcoa Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.
LOW 44 08 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LOW 44 08 SEP 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 548661EK9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alcoa Corp and 548661EK9 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alcoa Corp and 548661EK9

The main advantage of trading using opposite Alcoa Corp and 548661EK9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, 548661EK9 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 548661EK9 will offset losses from the drop in 548661EK9's long position.
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The idea behind Alcoa Corp and LOW 44 08 SEP 25 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 Stocks Directory module to find actively traded stocks across global markets.

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