Correlation Between Alcoa Corp and Global X

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

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

Diversification Opportunities for Alcoa Corp and Global X

-0.57

Correlation Coefficient

Alcoa Corp  Global X

Excellent diversification

The 3 months correlation between Alcoa and Global is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Global X Psychedelic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Psychedelic 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Psychedelic has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Global X go up and down completely randomly.

Pair Corralation between Alcoa Corp and Global X

If you would invest  3,592  in Alcoa Corp on September 25, 2024 and sell it today you would earn a total of  266.00  from holding Alcoa Corp or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Alcoa Corp  vs.  Global X Psychedelic

Alcoa Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Alcoa Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Psychedelic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Psychedelic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alcoa Corp and Global X

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

The idea behind Alcoa Corp and Global X Psychedelic 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.