Correlation Between Aeye and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Alcoa Corp, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Alcoa Corp.
Diversification Opportunities for Aeye and Alcoa Corp
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeye and Alcoa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and Alcoa Corp go up and down completely randomly.
Pair Corralation between Aeye and Alcoa Corp
Given the investment horizon of 90 days Aeye Inc is expected to generate 2.05 times more return on investment than Alcoa Corp. However, Aeye is 2.05 times more volatile than Alcoa Corp. It trades about -0.01 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.05 per unit of risk. If you would invest 121.00 in Aeye Inc on September 13, 2024 and sell it today you would lose (5.00) from holding Aeye Inc or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aeye Inc vs. Alcoa Corp
Performance |
| Timeline |
| Aeye Inc |
| Alcoa Corp |
Aeye and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Alcoa Corp
The main advantage of trading using opposite Aeye and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Aeva Technologies | Aeye vs. Quantumscape Corp |
| Alcoa Corp vs. Fortitude Gold Corp | Alcoa Corp vs. New Gold | Alcoa Corp vs. Galiano Gold | Alcoa Corp vs. GoldMining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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