Correlation Between Alcoa Corp and Huber Capital

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

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

Diversification Opportunities for Alcoa Corp and Huber Capital

0.56

Correlation Coefficient

Alcoa Corp  Huber Capital

Very weak diversification

The 3 months correlation between Alcoa and Huber is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Huber Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Small 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 Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Small has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Huber Capital go up and down completely randomly.

Pair Corralation between Alcoa Corp and Huber Capital

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Huber Capital. In addition to that, Alcoa Corp is 2.25 times more volatile than Huber Capital Small. It trades about -0.07 of its total potential returns per unit of risk. Huber Capital Small is currently generating about -0.1 per unit of volatility. If you would invest  2,867  in Huber Capital Small on December 28, 2024 and sell it today you would lose (230.00) from holding Huber Capital Small or give up 8.02% 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.  Huber Capital Small

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.

Huber Capital Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huber Capital Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alcoa Corp and Huber Capital

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

The idea behind Alcoa Corp and Huber Capital Small 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.