Correlation Between Alcoa Corp and INC

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

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

Diversification Opportunities for Alcoa Corp and INC

0.0

Correlation Coefficient

Alcoa Corp  INC

Pay attention - limited upside

The 3 months correlation between Alcoa and INC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC 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 INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and INC go up and down completely randomly.

Pair Corralation between Alcoa Corp and INC

If you would invest (100.00) in INC on December 26, 2024 and sell it today you would earn a total of  100.00  from holding INC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alcoa Corp  vs.  INC

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.

INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alcoa Corp and INC

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

The idea behind Alcoa Corp and INC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.