Correlation Between Alcoa Corp and I 80

Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and I 80 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 I 80 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcoa Corp and I 80 Gold Corp, you can compare the effects of market volatilities on Alcoa Corp and I 80 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 I 80. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and I 80.

Diversification Opportunities for Alcoa Corp and I 80

-0.54

Correlation Coefficient

Alcoa Corp  I 80

Excellent diversification

The 3 months correlation between Alcoa and IAUX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and I 80 Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I 80 Gold 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 I 80. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I 80 Gold has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and I 80 go up and down completely randomly.

Pair Corralation between Alcoa Corp and I 80

Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the I 80. But the stock apears to be less risky and, when comparing its historical volatility, Alcoa Corp is 1.93 times less risky than I 80. The stock trades about -0.07 of its potential returns per unit of risk. The I 80 Gold Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  53.00  in I 80 Gold Corp on December 26, 2024 and sell it today you would earn a total of  10.00  from holding I 80 Gold Corp or generate 18.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alcoa Corp  vs.  I 80 Gold Corp

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

I 80 Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in I 80 Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, I 80 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcoa Corp and I 80

The main advantage of trading using opposite Alcoa Corp and I 80 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, I 80 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 I 80 will offset losses from the drop in I 80's long position.

The idea behind Alcoa Corp and I 80 Gold Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.