Correlation Between Alcoa Corp and American Picture
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and American Picture 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 American Picture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and American Picture House, you can compare the effects of market volatilities on Alcoa Corp and American Picture 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 American Picture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and American Picture.
Diversification Opportunities for Alcoa Corp and American Picture
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alcoa and American is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House 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 American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and American Picture go up and down completely randomly.
Pair Corralation between Alcoa Corp and American Picture
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the American Picture. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 2.24 times less risky than American Picture. The stock trades about -0.07 of its potential returns per unit of risk. The American Picture House is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 29.00 in American Picture House on December 28, 2024 and sell it today you would lose (4.00) from holding American Picture House or give up 13.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alcoa Corp vs. American Picture House
Performance |
Timeline |
Alcoa Corp |
American Picture House |
Alcoa Corp and American Picture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alcoa Corp and American Picture
The main advantage of trading using opposite Alcoa Corp and American Picture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, American Picture 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 American Picture will offset losses from the drop in American Picture's long position.Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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