Correlation Between Alcoa Corp and OCCIDENTAL
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By analyzing existing cross correlation between Alcoa Corp and OCCIDENTAL PETE P, you can compare the effects of market volatilities on Alcoa Corp and OCCIDENTAL 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 OCCIDENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and OCCIDENTAL.
Diversification Opportunities for Alcoa Corp and OCCIDENTAL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alcoa and OCCIDENTAL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and OCCIDENTAL PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCCIDENTAL PETE P 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 OCCIDENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCCIDENTAL PETE P has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and OCCIDENTAL go up and down completely randomly.
Pair Corralation between Alcoa Corp and OCCIDENTAL
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.91 times more return on investment than OCCIDENTAL. However, Alcoa Corp is 1.91 times more volatile than OCCIDENTAL PETE P. It trades about 0.05 of its potential returns per unit of risk. OCCIDENTAL PETE P is currently generating about 0.01 per unit of risk. If you would invest 3,305 in Alcoa Corp on August 28, 2024 and sell it today you would earn a total of 1,417 from holding Alcoa Corp or generate 42.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 70.62% |
| Values | Daily Returns |
Alcoa Corp vs. OCCIDENTAL PETE P
Performance |
| Timeline |
| Alcoa Corp |
| OCCIDENTAL PETE P |
Alcoa Corp and OCCIDENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and OCCIDENTAL
The main advantage of trading using opposite Alcoa Corp and OCCIDENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, OCCIDENTAL 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 OCCIDENTAL will offset losses from the drop in OCCIDENTAL's long position.The idea behind Alcoa Corp and OCCIDENTAL PETE P 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.| OCCIDENTAL vs. Ryanair Holdings PLC | OCCIDENTAL vs. JD Sports Fashion | OCCIDENTAL vs. TFI International | OCCIDENTAL vs. Hooker Furniture |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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