Correlation Between Alcoa Corp and Greenshift Corp

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

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

Diversification Opportunities for Alcoa Corp and Greenshift Corp

-0.5

Correlation Coefficient

Alcoa Corp  Greenshift Corp

Very good diversification

The 3 months correlation between Alcoa and Greenshift is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Greenshift Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenshift Corp 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 Greenshift Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenshift Corp has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Greenshift Corp go up and down completely randomly.

Pair Corralation between Alcoa Corp and Greenshift Corp

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.29 times more return on investment than Greenshift Corp. However, Alcoa Corp is 3.43 times less risky than Greenshift Corp. It trades about 0.23 of its potential returns per unit of risk. Greenshift Corp is currently generating about 0.02 per unit of risk. If you would invest  3,020  in Alcoa Corp on September 5, 2024 and sell it today you would earn a total of  1,570  from holding Alcoa Corp or generate 51.99% return on investment over 90 days.

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

Alcoa Corp  vs.  Greenshift Corp

Alcoa Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Greenshift Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenshift Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Greenshift Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alcoa Corp and Greenshift Corp

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

The idea behind Alcoa Corp and Greenshift Corp 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.