Correlation Between International Business and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Alcoa Corp, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Alcoa Corp.
Diversification Opportunities for International Business and Alcoa Corp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Alcoa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and International Business 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 International Business Machines 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 International Business i.e., International Business and Alcoa Corp go up and down completely randomly.
Pair Corralation between International Business and Alcoa Corp
Considering the 90-day investment horizon International Business is expected to generate 2.92 times less return on investment than Alcoa Corp. But when comparing it to its historical volatility, International Business Machines is 1.96 times less risky than Alcoa Corp. It trades about 0.09 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,192 in Alcoa Corp on August 25, 2024 and sell it today you would earn a total of 355.00 from holding Alcoa Corp or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Alcoa Corp
Performance |
| Timeline |
| International Business |
| Alcoa Corp |
International Business and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Alcoa Corp
The main advantage of trading using opposite International Business and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. CDW Corp | International Business vs. Eshallgo Class A | International Business vs. Amtech Systems | International Business vs. Gold Fields Ltd |
| Alcoa Corp vs. Eshallgo Class A | Alcoa Corp vs. Amtech Systems | Alcoa Corp vs. Gold Fields Ltd | Alcoa Corp vs. Aegean Airlines SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |