Correlation Between Alcoa Corp and Jackpot Digital
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Jackpot Digital 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 Jackpot Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Jackpot Digital, you can compare the effects of market volatilities on Alcoa Corp and Jackpot Digital 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 Jackpot Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Jackpot Digital.
Diversification Opportunities for Alcoa Corp and Jackpot Digital
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Jackpot is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Jackpot Digital go up and down completely randomly.
Pair Corralation between Alcoa Corp and Jackpot Digital
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Jackpot Digital. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 2.46 times less risky than Jackpot Digital. The stock trades about -0.09 of its potential returns per unit of risk. The Jackpot Digital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4.88 in Jackpot Digital on September 8, 2024 and sell it today you would lose (0.18) from holding Jackpot Digital or give up 3.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. Jackpot Digital
Performance |
Timeline |
Alcoa Corp |
Jackpot Digital |
Alcoa Corp and Jackpot Digital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and Jackpot Digital
The main advantage of trading using opposite Alcoa Corp and Jackpot Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Jackpot Digital 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 Jackpot Digital will offset losses from the drop in Jackpot Digital's long position.Alcoa Corp vs. Aquagold International | Alcoa Corp vs. Barloworld Ltd ADR | Alcoa Corp vs. Morningstar Unconstrained Allocation | Alcoa Corp vs. Thrivent High Yield |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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