Correlation Between Alcoa Corp and 06051GGC7

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and 06051GGC7 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 06051GGC7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and BANK AMER P, you can compare the effects of market volatilities on Alcoa Corp and 06051GGC7 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 06051GGC7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and 06051GGC7.

Diversification Opportunities for Alcoa Corp and 06051GGC7

-0.6

Correlation Coefficient

Alcoa Corp  06051GGC7

Excellent diversification

The 3 months correlation between Alcoa and 06051GGC7 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and BANK AMER P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK AMER P 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 06051GGC7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK AMER P has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and 06051GGC7 go up and down completely randomly.

Pair Corralation between Alcoa Corp and 06051GGC7

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 5.15 times more return on investment than 06051GGC7. However, Alcoa Corp is 5.15 times more volatile than BANK AMER P. It trades about 0.02 of its potential returns per unit of risk. BANK AMER P is currently generating about -0.01 per unit of risk. If you would invest  4,226  in Alcoa Corp on September 5, 2024 and sell it today you would earn a total of  364.00  from holding Alcoa Corp or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Alcoa Corp  vs.  BANK AMER P

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.

BANK AMER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK AMER P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANK AMER P investors.

Pair Trading with Alcoa Corp and 06051GGC7

The main advantage of trading using opposite Alcoa Corp and 06051GGC7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, 06051GGC7 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 06051GGC7 will offset losses from the drop in 06051GGC7's long position.

The idea behind Alcoa Corp and BANK AMER P 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.