Correlation Between Alcoa Corp and Fieldstone UVA

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Fieldstone UVA 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 Fieldstone UVA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and Fieldstone UVA Unconstrained, you can compare the effects of market volatilities on Alcoa Corp and Fieldstone UVA 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 Fieldstone UVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Fieldstone UVA.

Diversification Opportunities for Alcoa Corp and Fieldstone UVA

-0.73

Correlation Coefficient

Alcoa Corp  Fieldstone UVA

Pay attention - limited upside

The 3 months correlation between Alcoa and Fieldstone is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Fieldstone UVA Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fieldstone UVA Uncon 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 Fieldstone UVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fieldstone UVA Uncon has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Fieldstone UVA go up and down completely randomly.

Pair Corralation between Alcoa Corp and Fieldstone UVA

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 7.36 times more return on investment than Fieldstone UVA. However, Alcoa Corp is 7.36 times more volatile than Fieldstone UVA Unconstrained. It trades about 0.19 of its potential returns per unit of risk. Fieldstone UVA Unconstrained is currently generating about -0.03 per unit of risk. If you would invest  3,202  in Alcoa Corp on August 30, 2024 and sell it today you would earn a total of  1,386  from holding Alcoa Corp or generate 43.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alcoa Corp  vs.  Fieldstone UVA Unconstrained

Alcoa Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Fieldstone UVA Uncon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fieldstone UVA Unconstrained has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Fieldstone UVA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alcoa Corp and Fieldstone UVA

The main advantage of trading using opposite Alcoa Corp and Fieldstone UVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Fieldstone UVA 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 Fieldstone UVA will offset losses from the drop in Fieldstone UVA's long position.

The idea behind Alcoa Corp and Fieldstone UVA Unconstrained 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.