Correlation Between AmeraMex International and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both AmeraMex International and Alcoa Corp 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 AmeraMex International and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Alcoa Corp, you can compare the effects of market volatilities on AmeraMex International and Alcoa Corp 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 AmeraMex International with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Alcoa Corp.
Diversification Opportunities for AmeraMex International and Alcoa Corp
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AmeraMex and Alcoa is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and AmeraMex International 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 AmeraMex International are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of AmeraMex International i.e., AmeraMex International and Alcoa Corp go up and down completely randomly.
Pair Corralation between AmeraMex International and Alcoa Corp
Given the investment horizon of 90 days AmeraMex International is expected to generate 0.5 times more return on investment than Alcoa Corp. However, AmeraMex International is 1.99 times less risky than Alcoa Corp. It trades about -0.17 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.25 per unit of risk. If you would invest 19.00 in AmeraMex International on January 11, 2025 and sell it today you would lose (2.00) from holding AmeraMex International or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Alcoa Corp
Performance |
| Timeline |
| AmeraMex International |
| Alcoa Corp |
AmeraMex International and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Alcoa Corp
The main advantage of trading using opposite AmeraMex International and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| AmeraMex International vs. First Tractor | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. American Premium Water |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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