Correlation Between Alcoa Corp and 12663QAC9

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and 12663QAC9 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 12663QAC9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and US12663QAC96, you can compare the effects of market volatilities on Alcoa Corp and 12663QAC9 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 12663QAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and 12663QAC9.

Diversification Opportunities for Alcoa Corp and 12663QAC9

-0.57

Correlation Coefficient

Alcoa Corp  12663QAC9

Excellent diversification

The 3 months correlation between Alcoa and 12663QAC9 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and US12663QAC96 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US12663QAC96 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 12663QAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US12663QAC96 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and 12663QAC9 go up and down completely randomly.

Pair Corralation between Alcoa Corp and 12663QAC9

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 2.57 times more return on investment than 12663QAC9. However, Alcoa Corp is 2.57 times more volatile than US12663QAC96. It trades about 0.22 of its potential returns per unit of risk. US12663QAC96 is currently generating about -0.12 per unit of risk. If you would invest  3,041  in Alcoa Corp on September 4, 2024 and sell it today you would earn a total of  1,529  from holding Alcoa Corp or generate 50.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.81%
Values	Daily Returns

Alcoa Corp  vs.  US12663QAC96

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.

US12663QAC96

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US12663QAC96 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 US12663QAC96 investors.

Pair Trading with Alcoa Corp and 12663QAC9

The main advantage of trading using opposite Alcoa Corp and 12663QAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, 12663QAC9 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 12663QAC9 will offset losses from the drop in 12663QAC9's long position.

The idea behind Alcoa Corp and US12663QAC96 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.