Correlation Between Alcoa Corp and Sycamore Entmt

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

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

Diversification Opportunities for Alcoa Corp and Sycamore Entmt

0.71

Correlation Coefficient

Alcoa Corp  Sycamore Entmt

Poor diversification

The 3 months correlation between Alcoa and Sycamore is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Sycamore Entmt Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sycamore Entmt Grp 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 Sycamore Entmt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sycamore Entmt Grp has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Sycamore Entmt go up and down completely randomly.

Pair Corralation between Alcoa Corp and Sycamore Entmt

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.53 times less return on investment than Sycamore Entmt. But when comparing it to its historical volatility, Alcoa Corp is 4.5 times less risky than Sycamore Entmt. It trades about 0.22 of its potential returns per unit of risk. Sycamore Entmt Grp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Sycamore Entmt Grp on September 4, 2024 and sell it today you would earn a total of  0.10  from holding Sycamore Entmt Grp or generate 166.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Alcoa Corp  vs.  Sycamore Entmt Grp

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.

Sycamore Entmt Grp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sycamore Entmt Grp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Sycamore Entmt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and Sycamore Entmt

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

The idea behind Alcoa Corp and Sycamore Entmt Grp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.