Correlation Between Alcoa Corp and 91159HHW3

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and 91159HHW3 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 91159HHW3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and US BANCORP, you can compare the effects of market volatilities on Alcoa Corp and 91159HHW3 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 91159HHW3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and 91159HHW3.

Diversification Opportunities for Alcoa Corp and 91159HHW3

-0.73

Correlation Coefficient

Alcoa Corp  91159HHW3

Pay attention - limited upside

The 3 months correlation between Alcoa and 91159HHW3 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and US BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US BANCORP 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 91159HHW3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US BANCORP has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and 91159HHW3 go up and down completely randomly.

Pair Corralation between Alcoa Corp and 91159HHW3

Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 3.0 times more return on investment than 91159HHW3. However, Alcoa Corp is 3.0 times more volatile than US BANCORP. It trades about 0.23 of its potential returns per unit of risk. US BANCORP is currently generating about -0.12 per unit of risk. If you would invest  3,015  in Alcoa Corp on September 2, 2024 and sell it today you would earn a total of  1,628  from holding Alcoa Corp or generate 54.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Alcoa Corp  vs.  US BANCORP

Alcoa Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 18 (%) 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.

US BANCORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANCORP 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 US BANCORP investors.

Pair Trading with Alcoa Corp and 91159HHW3

The main advantage of trading using opposite Alcoa Corp and 91159HHW3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, 91159HHW3 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 91159HHW3 will offset losses from the drop in 91159HHW3's long position.

The idea behind Alcoa Corp and US BANCORP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.