Correlation Between Alcoa Corp and 615369AX3

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and 615369AX3 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 615369AX3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and MCO 31 29 NOV 61, you can compare the effects of market volatilities on Alcoa Corp and 615369AX3 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 615369AX3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and 615369AX3.

Diversification Opportunities for Alcoa Corp and 615369AX3

-0.32

Correlation Coefficient

Alcoa Corp  615369AX3

Very good diversification

The 3 months correlation between Alcoa and 615369AX3 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and MCO 31 29 NOV 61 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO 31 29 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 615369AX3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCO 31 29 has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and 615369AX3 go up and down completely randomly.

Pair Corralation between Alcoa Corp and 615369AX3

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.86 times more return on investment than 615369AX3. However, Alcoa Corp is 1.86 times more volatile than MCO 31 29 NOV 61. It trades about 0.02 of its potential returns per unit of risk. MCO 31 29 NOV 61 is currently generating about -0.01 per unit of risk. If you would invest  4,444  in Alcoa Corp on September 4, 2024 and sell it today you would earn a total of  146.00  from holding Alcoa Corp or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

Alcoa Corp  vs.  MCO 31 29 NOV 61

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.

MCO 31 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCO 31 29 NOV 61 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 615369AX3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alcoa Corp and 615369AX3

The main advantage of trading using opposite Alcoa Corp and 615369AX3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, 615369AX3 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 615369AX3 will offset losses from the drop in 615369AX3's long position.

The idea behind Alcoa Corp and MCO 31 29 NOV 61 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.