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

-0.24

Correlation Coefficient

Alcoa Corp  American Picture

Very good diversification

The 3 months correlation between Alcoa and American is -0.24. 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 2.37 times less risky than American Picture. The stock trades about -0.19 of its potential returns per unit of risk. The American Picture House is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in American Picture House on December 1, 2024 and sell it today you would earn a total of  1.00  from holding American Picture House or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Alcoa Corp  vs.  American Picture House

Alcoa Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alcoa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

American Picture House

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, American Picture reported solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Alcoa Corp and American Picture House 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.